Carnegie  Endowment  for  International  Peace 


DIVISION  OF  ECONOMiCS  AND  HISTORY 

JOHN  BATES  CLARK,   DIRECTOR 


PRELIMINARY  ECONOMIC  STUDIES  OF  THE  WAR 


EDITED  BT 

DAVID  KINLEY 

Profeitor  of  Polidcai  Economy,  University  of  lilioois 
Member  o(  Committee  of  Reiearch  of  the  Endowment 

No.  9 


INFLUENCE  QF  THE  GREAT  WAR 
UPON  SHIPPING 


BY 


J.    RUSSELL  SMITH 

Professor  of  Geography  and  Industry,  University  of  Pennsylvania 


NEW  YORK 

OXFORD  UNIVERSITY  PRESS 

AMERICAN  BRANCH;  3S  Wmt  32Mt>  Stxe«t 
-LONDON.  TORONTO.  MELBOURNE,  AND  BOMBA  • 

^  -  1919 


4'« 


mm 


Carnegie  Endowment  for  International  Peace 


DIVISION  OF  ECONOMICS  AND  HISTORY 
JOHN   BATES  CLARK,  DIRECTOR 


PRELIMINARY  ECONOMIC   STUDIES   OF  THE  WAR 


EDITED  BY 
DAVID    KINLEY 

Professor  of  Political  Economy,  University  of  Illinois 
Member  of  Committee  of  Research  of  the  Endowment 


No.  9 


INFLUENCE  OF  THE  GREAT  WAR 
UPON   SHIPPING 


BY 


J.  RUSSELL   SMITH 

Professor  of  Geography  and  Industry,  University  of  Pennsylvania 


NEW  YORK 

OXFORD  UNIVERSITY  PRESS 

AMERICAN  BRANCH:  35  West  32nd  Street 
LONDON.  TORONTO.  MELBOURNE.  AND  BOMBAY 

1919 


COPYRIGHT  1919 

BY    THE 

CARNEGIE  ENDOWMENT  FOR  INTERNATIONAL  PEACE 
2  Jackson  Place,  Washington,  D.  C. 


•^1>G 


EDITOR'S  PREFACE 

This  monograph  on  shipping,  by  Professor  J.  Russell  Smith, 
of  the  University  of  Pennsylvania,  is  one  of  the  series  of  pre- 
liminary war  studies  undertaken  by  the  Endowment,  the  first  of 
which  was  published  in  January,  1918.  Few  matters  connected 
with  the  war  have  attracted  the  attention  of  the  public  of  the 
country,  and,  indeed,  of  the  world,  in  recent  months  so  much 
as  the  question  of  the  shipping  supply.  The  dastardly  policy 
of  the  Imperial  German  Government  in  sinking  all  ships,  with- 
out reference  to  their  character  or  their  mission,  has  proved  so 
serious  a  menace  that  for  a  time  some  alarm  was  felt  as  to  the 
ability  of  the  United  States  and  her  allies  to  find  sufficient  means 
of  transportation  for  men  and  goods.  When  the  question  be- 
came a  pressing  one  for  us  we  turned  naturally  to  the  experi- 
ence of  our  English  brethren.  But  our  problem  was  somewhat 
different  from  theirs,  for  the  reason  that  we  did  not  have  the 
experience  and  facilities  on  so  large  a  scale  as  had  Great  Britain. 
Moreover,  it  seems  as  if  nations,  like  individuals,  refuse  to  bene- 
fit by  the  experience  of  others.  The  British  Government,  in  its 
attempts  to  stimulate  and  regulate  ship  production,  and  to  con- 
trol shipping  in  the  general  interest,  made  many  blunders  which 
we  might  have  learned  from  her  experience  to  avoid.  For,  in 
spite  of  the  fact  that  Britain  is  a  shipping  nation,  we  find  in  the 
early  government  attempts  to  control  shipping  some  such  igno- 
rance, some  such  blundering  and  some  such  inefficiency  as  have 
marked  our  own  conduct  in  the  matter. 

Professor  Smith  describes  and  explains  the  causes  of  our 
blundering  and  inefficiency  so  fully  that  it  is  not  necessary  to 
say  much  about  them  here.  It  seems  clear,  however,  to  a  dis- 
interested observer  that  there  has  been  little  in  our  experience 
during  the  past  year  in  connection  with  shipping  to  justify  us  in 
thinking  that  governments  are  more  efficient  than  they  ever  were 


248518 


iv  EDITOR  S    PREFACE 

in  economic  matters ;  or  that  the  piibhc  interest  on  the  whole 
is  any  better  served  by  the  entrance  of  the  government  upon 
the  field  of  industrial  activity.  Regulation  the  government  may 
undertake  successfully,  provided  it  will  leave  operation  and 
management  to  individual  intelligence,  initiative  and  enterprise. 
For  government  departments  must  work  by  general  rules,  .and 
general  rules  are  not  applicable  to  the  details  of  industry  and 
commerce.  No  more  forcible  illustration  of  this  could  be  found 
than  the  story  told  by  Professor  Smith  of  an  incident  of  the 
British  experience,  in  which,  because  an  order  had  been  issued 
that  ships  nearest  completion  should  be  used  for  the  most  im- 
mediate need,  a  vessel  constructed  for  one  purpose  was  stripped 
to  the  keel  in  order  to  make  an  oil  tanker,  while  the  framework 
for  another  vessel  was  on  an  adjacent  slip  and  needed  only  to 
have  the  construction  go  forward  to  meet  the  need.  But  gov- 
ernment officials  thought  it  necessary  to  throw  away  all  the  labor 
and  time  consumed  in  the  construction  of  the  first  vessel  in  order 
to  follow  a  general  rule. 

To  be  sure,  one  might  wish  for  stronger  ground  for  believing 
in  all  respects  in  the  efficiency  of  some  of  our  great  business 
men,  if  that  much  lauded  efficiency  is  seen  at  its  best  in  the  parts 
that  some  of  them  have  taken  in  assisting  the  government  in  the 
administration  of  the  war.  Their  failure,  however,  so  far  as  it 
has  occurred,  may  be  due  to  the  fact  that  they  have  not  had 
sufficient  authority.  But  whatever  the  cause,  it  is  certainly  true 
that  we  have  had  less  success  than  we  expected,  both  from  gov- 
ernment intervention  and  from  the  participation  of  business 
leaders  in  government  affairs.  Fortunately,  so  far  as  shipping 
is  concerned,  we  seem  at  last  to  have  found  the  right  men,  and 
present  efficiency  in  shipbuilding  has  restored  public  confidence 
in  this  matter.  It  is  to  be  hoped  that  the  equals  of  Mr.  Schwab, 
Mr.  Hurley,  and  their  coadjutors  may  be  found  in  all  other 
lines  of  government  business  necessary  to  the  war. 

One  of  the  most  interesting  questions  connected  with  the  mat- 
ter of  shipping  is  the  policy  that  will  be  followed  after  the  war. 
The  savage  onslaught  which  Germany  has  made  on  the  inde- 


EDITORS    PREFACE  V 

pendence  of  the  world,  prefaced  as  it  was  by  long  continued 
economic  penetration,  has  led  many  people  in  dififerent  countries 
to  declare  that  each  country  must  be  economically  self-sufficing 
after  the  war;  that  never  again  "shall  we  depend"  upon  a 
foreign  Power  for  things  necessary  to  national  existence.  But 
no  country  can,  in  the  long  run,  be  economically  self-sufficing. 
No  country  can  be  mainly  so,  except  at  high  cost.  Nor  is  such  a 
reversion  to  extreme  nationalism  desirable,  either  from  the  point 
of  view  of  national  or  international  ethics,  or  of  international 
law.  One  of  the  aims  of  the  present  war  is  to  free  the  nations 
from  danger  of  domination,  economic  or  military.  With  that 
purpose  fully  attained,  economic  domination  need  not  be  feared. 
The  pursuit  of  a  policy  of  economic  isolation  by  the  nations  after 
the  war  would  defeat  one  purpose  of  the  war.  This  statement, 
of  course,  does  not  mean  that  economic  pressure  may  not  be 
justly  brought  upon  the  Central  Powers  after  the  war  if,  in  ad- 
dition to  their  military  defeat,  it  is  necessary  to  use  such  pres- 
sure to  educate  them  up  to  the  moral  plane  of  the  rest  of  the 
world. 

Three  lines  of  policy  are  open  for  the  w^orld  after  the  war. 
We  may  have,  as  just  intimated,  maritime  independence  on  the 
part  of  each  country,  under  government  control,  or  government 
operation ;  or,  in  the  second  place,  we  may  have  a  restoration  of 
the  conditions  of  competition,  without  the  evil  features  of  pool- 
ing and  monopoly  which  characterized  the  years  before  the  war; 
or,  in  the  third  place,  we  may  conceivably  have  a  policy  of  inter- 
nationalism in  which  the  shipping  supply  of  the  world  may  by 
agreement  be  apportioned  among  the  nations  according  to  some 
principle  agreed  on. 

If  every  government  undertakes  to  aid  shipbuilding  and  pro- 
motes shipping,  which  latter  is  a  different  thing,  there  will  surely 
be  a  supply  of  ships  far  in  excess  of  the  world's  needs.  What 
shall  be  done  with  the  surplus?  One  nation  would  cut  prices  to 
drive  out  the  ships  of  the  others.  The  result  would  be,  in  the 
long  run,  such  a  reduction  of  cost  of  shipping  to  shippers  at  the 
expense  of  the  general  public,  that  the  whole  plan  would  collapse. 


-vi  EDITOR  S    PREFACE 

That  the  nations  can  reach  a  conclusion  on  an  apportionment  of 
shipping  is  doubtful.  The  only  course  left  is  the  restoration  of 
shipbuilding  and  shipping  to  individual  enterprise.  Some 
assistance  may  properly  be  given  by  governments  both  to  ship- 
building, and  to  ship  operation,  but  such  assistance  should  be 
given  either  for  present  or  prospective  services  in  return.  And 
we  must  not  forget  that  we  may  be  generous  in  our  support 
of  shipbuilding  and  yet  render  our  efforts  nugatory  by  an  unwise 
policy  concerning  ship  operation. 

The  author's  criticism  of  our  past  policy  appears  to  the  editor 
to  be,  on  the  whole,  fair,  although  the  author  himself  must  of 
course  carry  the  responsibility  of  the  personal  judgment  which 
he  expresses  about  individual  officers.  It  must  be  borne  in  mind 
in  all  criticisms  of  public  officers,  especially  army  and  navy 
officers,  that  they  are  assigned  frequently  to  do  things  which 
they  themselves  do  not  feel  able  to  do  well.  The  editor  has 
watched  with  some  care  the  operation  of  the  government  depart- 
ments as  they  have  expanded  under  the  pressure  of  war  for  more 
than  a  year.  I  have  found  little,  however,  to  encourage  my 
belief  in  the  advantage  of  government  management  of  business 
except  for  certain  routine  work,  or  in  the  wisdom  and  fairness 
even  of  government  control. 

David  Kinley, 

Editor. 


FOREWORD 

Late  in  August,  1917,  I  was  asked  to  prepare  a  report  for 
the  Carnegie  Endowment  for  International  Peace  showing  the 
"  effects  of  the  war  on  shipping  as  a  commercial  proposition, 
with  especial  reference  to  the  United  States  and  Great  Britain; 
giving  an  account  of  the  ship  shortage  and  its  effects  on  rates 
and  profits;  the  efforts  of  the  different  countries  to  replace  the 
lost  ships;  the  proposals  for  new  kinds  of  ships,  such  as  the 
standard  ship ;  the  efforts  to  meet  the  shortage  by  increased  gov- 
ernmental control  such  as  the  taking  over  of  shipping  by  the 
British  and  American  Governments;  the  compulsory  and  volun- 
tary diversion  of  ships  from  one  trade  to  another,  the  transfer 
of  ships  from  flag  to  flag;  the  new  provisions  that  have  been 
made  to  meet  the  crisis  in  marine  insurance;  the  effect  of  the 
ship  shortage  and  the  taking  over  of  ships  on  imports  and  ex- 
ports— the  probable  loss  of  trade  routes  and  trade  and  the  absorp- 
tion of  trade  by  other  countries;  the  preparations  during  the  war 
for  shipping  expansion  after  the  war;  and  finally  whether  and  to 
what  extent  socialism  produced  by  the  war  will  be  permanent — 
a  question  on  which  the  shipping  administration  during  the  war 
has  much  bearing." 

This  has  proved  to  be  a  much  heavier  task  than  I  expected. 
For  example,  nearly  half  the  happenings  recorded  in  the  book 
have  occurred  since  I  began  it,  eight  months  ago.  It  is  so  close 
to  the  present  moment  that  we  have  not  had  time  for  perspective 
to  develop  or  for  the  material  to  be  partly  worked  up.  Accord- 
ingly, the  record  has  had  to  be  gathered  in  most  scattered  places. 
Many  statistics  have  had  to  be  consulted.  All  this  has  been 
much  more  work  than  I  could  do  alone  in  the  time  at  my  dis- 
posal, and  I  am  therefore  indebted  to  others  for  much  help.  I 
am  especially  indebted  to  Mr.  John  E.  Orchard  of  the  University 
of  Pennsylvania  for  constant,  loyal  and  discriminating  assistance. 

vii 


viii  FOREWORD 

The  chapters  on  Marine  Insurance  and  Government  Aid  to  Ship- 
ping are  almost  entirely  his  work.  I  am  also  indebted  to  Henri- 
etta Stewart  Smith  for  much  searching  for  material  and  for 
critical  assistance  with  several  chapters.  For  the  gathering  of 
material  in  connection  with  the  chapter  concerning  trade  I  am 
indebted  to  Mr.  W.  E.  Warrington,  Miss  Erna  Grassmuck  and 
Miss  Mary  B.  Goodhue.  To  Mr.  Octavius  Narberth  of  Lloyd's 
Register  of  Shipping  I  am  indebted  for  m.uch  advice  and  infor- 
mation. I  am  similarly  indebted  to  Mr.  O.  K.  Davis  of  New 
York.  I  wish  also  to  express  my  appreciation  of  the  skilful 
assistance  of  my  secretary.  Miss  Anna  Y.  Satterthwaite. 

Great  effort  has  been  made  for  the  desired  but  never  entirely 
attainable  accuracy.  This  book  is  one  which  by  the  nature  of 
its  preparation  should  make  an  appeal  for  the  clemency  of  the 
future  critic.  It  is  written  in  the  midst  of  a  struggle.  As  I 
finish  it  the  Germans  are  making  their  terrifying  drives  toward 
Amiens,  and  there  is  serious  Allied  talk  of  the  possibility  of 
German  occupation  of  Paris  and  the  Channel  ports.  In  this  book 
I  am  trying  to  state  and  explain  the  occurrences  of  the  first  part 
of  the  struggle,  so  that  we  may  the  better  understand  the  period 
that  is  to  follow.  Every  passing  month  gives  the  critic  a  gift 
of  new  fact  and  of  perspective  that  is  denied  the  author,  who  has 
undertaken  this  work  in  the  hope  that  it  may  do  a  little  to  increase 
the  understanding  of  one  of  the  many  phases  of  economic  activity 
with  which  our  government  must  deal  for  our  good  or  our  ill. 

J.  Russell  Smith. 
The  University  of  Pennsylvania, 
Philadciph  ia.  Pa. , 

May  30,  1918. 


CONTENTS 

CHAPTER  PAGE 

I  /The  Organization  of  World  Shipping  before  the 

Great   War    3 

II  (  The  World's  Shipping  Industry  during  the  War — 

Brief     Summary     with     Special     Emphasis     on 
Freight  Rates 26 

III  The  Effects  of  the  War  on  Marine  Insurance  ....        49 

IV  Trade  Dislocations   Due   to  War — Some   Possible 

Readjustments    74 

V  \  Government   Aid   to   Shipping    ' 124 

VI  Control  and  Operation  of  Shipping  by  the  British 

Government,  1914-1918    153 

VII  "Control  and  Operation  of  Shipping  by  the  United 

States  Government,  1914-1918    185 

VIII'   Shipbuilding  during  the  War — Technical  Develop- 
ment           217 

IX  Shipbuilding  in  the  United  Kingdom    244 

X  Shipbuilding  in  the  United  States,  1914  to  May, 

1918 266 

XI  .Shipping  Policy  after  the  Great  War   308 

XII  World     Shipping,     World     Organization,     World 

Peace      339 

Index   351 


INFLUENCE  OF  THE  GREAT  WAR 
UPON  SHIPPING 


CHAPTER  I 
The  Organization  of  World  Shipping  before  the  Great  War 

War  Destroys  the  Old  Order 

The  war  has  destroyed  the  daily  life  of  the  citizen,  put  him 
into  the  trenches,  giving  him  an  entirely  different  routine  and 
regimen.  Similarly  has  it  destroyed  a  wide  reaching  shipping 
organization,  and,  as  with  the  men,  the  ships  themselves  have 
in  many  cases  been  destroyed,  and  those  that  remain  are  in 
strange  uses  or  strange  management,  or  both. 

The  management  of  the  world's  shipping  has  not  received 
enough  attention  from  students  of  industrial  organization  and 
social  philosophy.  For  some  reason  economists  have,  in  times 
of  peace,  let  it  very  much  alone,  despite  the  fact  that  it  probably 
affords  an  unrivaled  example  for  the  testing  of  a  favorite 
piece  of  social  philosophy — the  doctrine  of  the  maintenance  of 
equality  through  the  maintenance  of  equality  of  opportunity. 
It  is  doubtful  if  there  is  to  be  found  anywhere  else  in  all  the 
world,  or  in  all  history,  so  good  an  opportunity  to  study  the 
workings  of  individualism  with  real  equality  of  opportunity  as 
the  commerce  of  the  sea  affords.  The  sea  is  always  there.  It 
takes  care  of  itself.  Use  does  not  destroy  it.  No  one  owns  it. 
In  times  of  peace  it  lies  open  to  all.  The  result  of  man's  efforts 
in  this  arena  of  freedom  should  be  of  great  interest  to  the  student 
of  society. 

It  is  true  that  the  prewar  organization  of  ocean  commerce  is 
gone,  for  a  time  at  least,  but  its  present  non-existence  should 
not  end  our  interest  in  it.  Even  during  the  period  of  the  Great 
War  the  organization  of  ocean  commerce  needs  to  be  studied 
in  retrospect,  because  of  the  necessity  of  some  kind  of  reorgani- 
zation that  must  follow  the  war.     When  the  military  struggle 

3 


4  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

ends,  men  will  have  new  and  greatly  enlarged  ideas  of  the  role 
that  government  may  play.  Governments  themselves  will  be  in 
complete  control  of  their  shipping.  Governments  will  probably 
own  outright  much  of  their  shipping,  some  of  their  shipyards 
and  many  other  productive  industries.  Starvation  will  have 
taught  us,  as  books  could  never  teach  us,  the  necessity  of  com- 
merce and  our  absolute  dependence  upon  the  sea.  How  shall  we 
of  the  postwar  world  utilize  these  ships?  Shall  we  reconstruct 
the  old  system?  By  how  much  shall  we  vary?  In  any  dis- 
cussion of  this  reconstruction  we  need  first  to  have  a  picture 
of  the  organization  of  commerce  and  the  operation  of  the  world's 
shipping  as  it  was  before  the  great  explosion. 

What  Was  This  World  Commercial  Organization? 

To  understand  it  we  must  appreciate  the  importance  of  the 
base  fact :  namely,  that  in  times  of  peace  the  sea  is  free.  Any- 
body may  sail  his  ship  upon  it  wherever  he  will  or  can.  Not 
only  is  this  world's  highway  toll-less,  but  it  is  also  lighted  free 
of  charge,  and  is  carefully  surveyed  and  charted  that  the  ships 
may  be  safe  from  the  perils  of  nature.  Navies  protect  it  from 
pirates.  They  hunt  out  derelict  vessels  and  blow  them  up.  Pilots 
sail  far  out  from  shore  to  welcome  the  incoming  ship,  and  with 
their  special  knowledge  take  her  safely  into  port.  The  ports  hold 
out  an  almost  universal  welcome  to  the  ship.  Every  little  port 
wants  to  become  a  bigger  port.  Every  big  port  wants  to  become 
a  metropolis.  They  all  strive  with  each  other  in  the  race  for 
facilities  that  may  bring  them  ships  and  commerce.  ^Millions 
are  spent  digging  channels  through  which  the  ships  of  all  na- 
tions may  sail,  and  usually  free  of  all  cost,  into  the  welcoming 
harbor.  If  there  are  any  charges  for  channels  and  harbors,  they 
are  alike  to  all  shipowners. 

Not  only  are  the  natural  facilities  of  the  sea  and  the  artificial 
facilities  of  the  harbor  alike  open  to  all  ships  of  the  world,  but 
the  organization  of  business  is  such  that  anyone  can  enter  it. 
It  is  no  more  difficult,  requires  no  more  special  knowledge  to  own 


ORGAXIZATIOX    OF    WORLD    SHIPPIXG    BEFORE    THE    WAR  5 

a  freight  ship  for  hire  than  to  own  a  house  for  rent.  The  method 
of  conducting  them  is  the  same.  You  own  your  house,  or  your 
ship  in  full  or  in  part,  subject  to  partnership  or  mortgage.  You 
turn  it  over  to  an  agent  for  the  business  of  finding  a  customer 
for  it.  If  it  leaks,  he  patches  it.  If  it  needs  paint,  he  paints  it. 
If  it  needs  caretakers,  he  hires  them.  After  a  certain  period  he 
turns  over  the  proceeds  to  the  owner.  Here  indeed  is  an  oppor- 
tunity for  the  golden  age  of  free  competition.  But  what  did 
we  find?  We  found  trusts,  the  tightest  kind  of  trusts.  Between 
distant  countries  we  found  groups  of  steamship  lines  that  divide 
the  traffic  between  each  other  to  the  hundredth  of  a  per  cent. 
They  maintained  uniform  rates  of  freight  with  almost  as  little 
variation  as  the  post  office  maintains  the  price  of  stamps.  Indeed 
they  succeeded  in  taking  to  themselves  the  trade  as  definitely  as 
if  it  had  been  assigned  and  divided  among  them  by  statute.  It 
has  been  divided  by  statute — for  the  agreements  of  steamship 
lines  have  been  the  law — even  the  printed  law — of  many  a  trade 
route. 

This  statement  of  the  astonishing  absence  of  ■  competition 
where  one  would  expect  to  find  freedom  of  competition  should 
not  be  taken  as  covering  the  whole  of  the  world's  trade.  This 
trade  is  of  two  kinds :  monopolistic  and  free.  It  is  carried  on 
in  two  ways,  the  line  of  steamers  operated  as  a  unit  and  the 
single  ship  operated  as  a  unit.  It  is  the  line  traffic  that  tends 
to  become  monopolistic,  but  in  addition  to  line  traffic  there  were 
in  times  of  peace  thousands  of  vessels  operating  independently, 
commonly  called  tramps.  Those  ships  were  for  hire  to  anybody 
who  could  send  a  shipload  at  one  time.  This  is  a  great  limita- 
tion to  the  freedom  of  the  trade.  The  necessity  of  shipping  a 
minimum  of  2,000  to  8,000  tons  reserves  the  tramp  to  special 
shippers  and  special  commodities.  Who  ever  heard  of  a  ship- 
load of  cotton  cloth,  or  of  hats,  or  shoes,  or  autos,  or  locomotives, 
or  freight  cars,  of  cutlery,  books,  playing  cards  and  musical  in- 
struments, of  cigarettes,  ready-made  clothing,  or  ostrich  feathers, 
of  lard,  bacon,  butter,  biscuits,  canned  salmon  or  copper  ?  These 
are  typical  commodities  of  that  very  long  list  of  things  that  must 


6  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

go  in  small  quantities,  and  therefore  can  not  make  use  of  tramp 
service  but  need  the  regular  dependence  of  the  line  T  vessels 
sailing  on  schedule  and  combining  in  their  cargo  a'^nundred  or 
a  thousand  or  five  thousand  small  shipments  of  assorted  ma- 
terials. Shippers  can  avail  themselves  of  the  freely  competing 
tramps  only  with  goods  of  great  quantity,  usually  raw  materials 
of  low  value.  At  some  time  of  the  year  you  may  find  on  almost 
every  sea  ships  loaded  with  coal,  iron  ore,  nitrate  of  soda, 
wheat,  corn,  sugar,  lumber.  Many  of  these  tramp  commodities 
are  seasonal  goods,  handled  in  great  quantity  after  harvest  in 
a  busy  trade  that  falls  away  to  nothingness  a  few  months  later. 
Thus  the  Argentine  needs  one  hundred  tramp  ships  per  month 
in  November,  December  and  January  to  take  her  maize  to 
Europe.  During  those  months  she  imports  a  large  part  of  her 
millions  of  tons  of  coal,  which  comes  almost  exclusively  from 
Wales.  To  successfully  operate  these  tramp  steamers  is  a 
great  puzzle  in  applied  commercial  geography.  The  goal  of  the 
tramp  manager  is  to  keep  his  vessel  always  loaded,  a  fact  which 
the  nature  of  trade  always  denies  to  some  of  them.  Therefore 
the  most  skilful  manager  keeps  his  vessel  loaded  as  nearly  all 
the  time  as  possible.  He  can  not  consider  a  single  voyage  alone. 
He  must  consider  the  next  and  the  next.  He  prefers  to  sail 
from  Wales  to  Buenos  Aires  rather  than  to  Cape  Town  because 
Cape  Town  lacks  the  heavy  cargo  for  return  voyages,  so  that  the 
coal  ship  from  Cape  Town  must  often  go  in  search  of  cargo 
across  the  Indian  Ocean  to  India,  or  the  Atlantic  Ocean  to  South 
America  before  her  captain  can  hear  the  welcome  sound  of 
freight  going  into  the  hold.  If  outbound  to  Australia,  she  may 
at  some  seasons  carry  coal  thence  across  the  wide  Pacific  to 
Chile,  and  load  there  with  nitrate  of  soda  for  the  North  Atlantic. 
In  this  ocean  her  owners  would  much  prefer  to  discharge  at 
Savannah,  Ga.,  than  at  London,  for  Savannah  has  cotton  and 
lumber  to  ship  to  Europe,  whereas  hungry  London  has  nothing 
for  the  tramp,  which  must  go  out  in  ballast,  while  the  liner  takes 
the  London  export  of  fine  manufactures. 

Rather  than   fruitless   ballast,   any   owner   would   choose   to 


ORGANIZATION    OF    WORLD    SHIPPING    BEFORE    THE    WAR  7 

take  coal  at  less  than  cost,  and  so  it  happens  that  the  world's 
coal  is  distributed  as  a  kind  of  by-product  of  the  tramp  steamer 
traffic,  a:  '  Britain  is  its  chief  source  of  supply,  not  because  of 
superior  quality  or  quantity  of  her  coal,  for  in  both  of  these 
respects  she  is  the  inferior  of  the  United  States,  but  because 
Britain  is  a  tremendous  importer  of  food  and  raw  materials, 
and,  as  her  export  of  manufactures  is  much  lighter  than  the 
raw  imports  plus  the  food,  she  has  five  or  six  million  tons  a 
month  of  empty  outgoing  ships  whose  owners  are  glad  to  carry 
coal  at  a  nominal  price.  Since  the  United  States  is  an  exporter 
of  bulky  material,  a  coal  vessel  leaving  our  shores  would  have 
to  come  back  in  ballast,  and  therefore  our  export  coal  freights 
are  entirely  in  disproportion  to  British  freights,  and  our  role  as 
coal  exporter  bears  no  proportion  to  our  role  as  coal  producer, 
our  export  in  1913  having  been  22,000,000  tons,  while  that  of 
England  was  77,000,000  tons.  Yet  our  coal  production  was 
several  times  larger  than  that  of  the  British  Isles. 

This  tramp  traffic  reflects  the  freedom  of  the  sea.  It  is  com- 
petitive. But  this  fact  is  of  small  comfort  to  the  importing 
merchant  in  Rio  Janeiro,  Cape  Town,  Melbourne,  Calcutta, 
Shanghai,  London,  or  New  York,  whose  interest  lies  in  groceries, 
in  clothes,  in  manufactured  machinery,  or  that  wide  variety  of 
things  handled  by  department  stores.  Handlers  of  this  class  of 
goods  wish  to  get  a  few  dray  loads  of  boxes  and  bales  which  may 
comprise  altogether  a  hundred  varieties  of  goods.  They  are 
interested  in  the  ship  that  sticks  to  her  route  twelve  months  in  the 
year,  and  has  enough  sister  ships  to  make  a  good  schedule.  This 
line  traffic  has  grown  up  since  the  period  of  the  steamer. 
Roughly,  it  is  the  creation  of  a  half  century.  The  merchant's 
ship  of  an  earlier  day  gave  way  to  the  packet  ship,  and  the 
packet  ship  to  the  liner,  and  the  line  traffic  has  been  ever  in- 
creasing both  in  proportion  of  the  world's  trade  routes  that  it 
satisfactorily  served,  and  in  the  frequency  and  quality  of  the 
service. 

At  the  opening  of  the  war,  Britain  had  approximately  3,900 
vessels  of  over  1,(500  tons  each,  with  an  aggregate  gross  tonnage 


8  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

of  about  16,900,000  tons.  Of  these  3,900  vessels,  1,200  with 
7,000,000  gross  tons,  slightly  less  than  half  the  total  tonnage, 
were  liners/ 

Development  of  Line  Traffic 

The  transoceanic  line  traffic  began  on  the  North  Atlantic  where 
the  advantages  of  a  short  route  and  great  traffic  gave  it  such 
excellent  opportunity,  but  it  has  widened  out  until  in  1914  we 
found  ourselves  possessed  of  fairly  regular  line  service,  main- 
taining regular  schedule  and  rather  frequent  sailings  to  all  the 
important  parts  of  the  world.  From  New  York  there  were  lines 
to  India,  China  and  Japan,  to  Australia,  South  Africa,  South 
America,  both  east  and  west,  to  the  West  Indies,  to  Central 
America,  to  Spain,  Italy,  Greece,  Egypt  and  Constantinople, 
to  all  the  countries  of  western  Europe,  including  Denmark,  Nor- 
way and  Sweden, 

The  Evolution  of  the  Shipping  Trust 

After  one  line  has  established  itself  in  the  trade,  its  success 
naturally  tempts  a  rival.  Rivals  that  share  one's  business  are 
never  desired.  The  natural  result  is  competition  and  a  rate 
war.  Rate  wars  by  rail  and  ship  have  been  greatly  overappreci- 
ated  by  the  too  little  thinking  citizen.  Now  a  rate  war  is  peculiar, 
in  that  it  has  the  same  result  whether  it  is  won  or  lost,  the  re- 
sult being  the  elimination  of  competition.  If  the  newcomer  by 
his  competition  makes  it  so  unprofitable  for  the  existing  service 
that  he  must  be  taken  in,  there  is  a  rate  agreement  and  competi- 
tion is  ended.  If  the  fight  ends  so  disastrously  that  one  company 
or  the  other  must  fail  and  go  away  or  be  taken  over  by  the  sur- 
vivor, the  competition  is  ended.  In  fact,  open  competition  among 
ship  lines  bears  a  striking  resemblance  to  the  same  phenomenon 
by  railroads.  For  half  a  century  we  gleefully  clapped  our  hands 
when  the  railroads  competed  and  then  we  discovered  that  there 
could  not  be  any  such  basis  of  railroad  transport.  Now  we  have 
come  to  believe  in  and  apply  the  doctrine  that  the  railroad  is  a 

'  The  Economic  World,  May  19,  1917.     Fairplay,  November  8,  1917. 


ORGANIZATION    OF    WORLD    SHIPPING    BEFORE    THE    WAR  9 

natural  monopoly,  that  rate  wars  can  not  be  tolerated,  and  that 
rates  must  be  controlled  by  statute. 

While  the  sea  has  been  free  to  carriers,  the  fact  that  no  one 
owned  it  has  tended  to  put  its  trade  beyond  the  jurisdiction  of 
any  country,  especially  as  the  dififerent  ends  of  trade  routes 
were  usually  in  different  countries.  With  all  this  free- 
dom the  last  half  century  has  witnessed  the  creation  upon 
its  mobile  surface  of  a  situation  that  bears  a  striking  resemblance 
to  transportation  by  land,  so  that  by  the  beginning  of  the  Great 
War  the  normal  condition  in  ocean  line  service  the  world  over 
was  one  of  agreement  among  line  carriers.  Whether  it  was  in 
the  waters  of  the  Tropic  or  the  Arctic,  of  the  Occident  or  the 
Orient,  the  two  or  more  lines  engaged  in  the  same  trade  usually 
agreed  as  to  rates,  sailings,  etc.,  although  they  might  compete 
as  to  service,  and  their  agreements  might  from  time  to  time  be 
ended  by  fierce  rate  wars,  to  be  followed  again  by  new  treaties 
of  peace,  with  conditions  more  or  less  favorable  to  the  strong 
or  the  weak  members  of  the  combine. 

Tlie  Prevention  of  Competition  within  the  Group 

How  are  these  groups  of  lines  kept  from  competing  with  each 
other  on  the  free  sea  ?    There  are  several  ways. 

Fear. 

The  simplest  means  of  control  is  fear  of  trouble,  where  with- 
out any  agreement  whatever  the  small  companies  follow  the 
lead,  so  far  as  they  can,  of  the  big  fellows  in  the  same  service. 
They  know  they  must,  or  competition  will  drive  them  off  the 
seas.  This  form  of  agreement  of  action  may,  however,  have  no 
more  formality  and  apply  no  more  rules  than  that  of  an  Ameri- 
can express  company  which  has  rates  for  a  certain  service  that 
duplicate  those  of  the  parcel  post. 

Formal  Agreements  as  to  Rates. 

(1).  Fixed  rate  agreements.  In  several  of  the  North  Atlantic 
agreements,  such  as  to  the  Baltic  or  the  Mediterranean,  various 


10  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

members  of  the  conference  agree  on  prescribed  tariffs  which  are 
only  changed  by  mutual  consent. 

(2).  Minimum  rate  agreements.  This  is  the  common  device 
in  the  North  Atlantic  where  the  enormous  passenger  traffic  has 
called  into  being  a  fleet  of  freight  and  passenger  carrying 
steamers  that  have  much  more  freight  capacity  than  can  be  used 
in  normal  times,  even  in  the  direction  of  greatest  freight  move- 
ment, which  is  east  bound.  Here,  then,  in  this  empty  space  was 
the  most  pressing  necessity  for  some  kind  of  agreement.  Since 
they  can  not  all  get  enough  freight  even  by  competition  the 
companies  have  agreed  that  they  will  not  take  it  below  a  certain 
minimum,  which  rate  is  usually  the  actual  rate,  because  of  the 
impossibility  of  getting  any  higher  rate  when  there  is  so  much 
unused  space  sailing  every  day  or  two. 

(3).  Differential  rate  agreements.  In  some  services  some 
lines  have  slower  steamers  than  the  others  and  are  allowed 
to  take  freight  at  a  lower  rate  because  of  that  fact.  Here  again 
we  find  an  exact  duplicate  of  the  freight  differentials  that  have 
long  existed  between  Chicago  and  North  Atlantic  ports,  from 
Newport  News  to  Boston. 

Division  of  Territory. 

Many  of  these  agreements  provide  that  one  company  shall 
serve  certain  ports,  and  that  other  companies  shall  let  these 
ports  entirely  alone,  and  have  for  their  own  exclusive  use 
certain  other  ports.  Thus  the  Hamburg-American  runs  to  Ham- 
burg, and  the  North  German  Lloyd  to  Bremen,  and  as  a  result 
of  a  recent  rearrangement  of  a  conference,  Hamburg- American 
Lines  withdrew  their  New  Orleans  service,  leaving  that  trade 
to  be  served  by  the  British  lines  of  Lamport  and  Holt,  and  the 
Prince  Line.  Such  division  of  territory  works  to  good  advan- 
tage on  a  coast  with  many  ports  like  the  west  coast  of  South 
America,  in  which  many  small  ports  are  arranged  in  a  long 
string  so  that  it  is  a  great  advantage  to  all  concerned  if  the 
vessels  of  one  line  will  call  at  some  ports,  and  those  of  other 
lines  at  the  remaining  ports,  thus  giving  a  faster  service  to  all. 


ORGANIZATION    OF    WORLD    SHIPPING    BEFORE    THE    WAR  11 

Division  of  the  Traffic. 

(1).  By  restricting  the  number  of  sailings  on  the  part  of 
each  line.  A  good  example  of  this  is  furnished  by  the  agreement 
as  to  the  American-Brazilian  trade  by  which  the  Lamport  and 
Holt  Line  was  allowed  annually  twenty-four  sailings  from  New 
York;  the  Prince  Line  twenty-four  sailings;  the  Hamburg- 
American  Line  twenty-four  sailings,  while  returning  to  America 
allotments  were  as  follows :  Hamburg-American,  twenty-four 
sailings  to  New  York;  Prince  Line,  twenty- four  to  New 
York,  twelve  to  New  Orleans;  and  the  Lamport  and  Holt 
Line,  with  the  lion's  share,  as  many  as  might  suit  its  conven- 
ience. 

This  American-Brazilian  conference,  with  seventy-two  sailings 
a  year  from  New  York,  is  an  interesting  fact  to  keep  in  mind 
the  next  time  some  one  is  heard  to  announce  that  we  have  or  had 
no  lines  to  Brazil.  In  the  general  ignorance  which  prevails  con- 
cerning ocean  transportation  this  particular  statement,  for  which 
there  has  been  no  basis  in  fact,  for  several  decades  has  repeat- 
edly found  itself  in  all  kinds  of  places,  including  the  Con- 
gressional Record  and  serious  economic  discussion.  It  seems 
to  have  been  part  of  the  general  mythology  which  in  the  Amer- 
ican mind  surrounds  shipping.  This  agreement  for  the  seventy- 
two  sailings  was  signed  February  14,  1908,  and  was  the  treaty  of 
peace  that  ended  an  expensive  rate  war  that  had  made  all  parties 
lose  money  for  a  year. 

Pooling  the  Freight  Money. 

This  rather  common  device  sometimes  covers  the  total  income, 
sometimes  a  part  of  the  income.  Sometimes  it  is  only  used  as 
an  adjustment  to  balance  up  the  proportion  of  traffic  which  was 
allotted  in  advance  to  each  line  of  the  conference.  Thus  it  was 
applied  to  a  North  Atlantic  steerage  passenger  traffic  agreement 
in  such  a  way  that  any  company  carrying  more  than  its  agreed 
upon  share  should  pay  to  the  other  companies  seventy-five  francs 
for  each  excess  passenger.  At  other  times  the  same  result  is 
obtained  by  raising  the  rates  the  moment  that  the  company's 


12  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

quota  has  been  obtained.    This  automatically  shunts  the  traffic  to 
other  lines. 

An  interesting  example  of  agreement  between  lines  was  that 
of  January,  1903,  between  the  North  German  Lloyd  and  allied 
lines  on  the  one  hand,  and  the  French  lines  on  the  other.  The 
lines  divided  among  themselves  ^  the  entire  third  class  passenger 
traffic  from  ports  between  Cronstadt  and  Bordeaux,  both  in- 
cluded, to  the  ports  in  United  States  and  Canada.  It  was  to 
be  divided  between  the  two  groups  in  proportion  to  the  num- 
bers they  carried  during  the  years  1900  to  1902,  inclusive. 

Keeping  down  Competition  of  Carriers  Outside  the  Conference 

The  above  mentioned  methods  of  controlling  competition  all 
refer  to  those  lines  that  have  established  places  in  the  agreement. 
But  how  shall  these  agreeing  members  keep  outsiders  from  com- 
peting with  them  ?    There  are  several  means. 

(a).  The  deferred  rebate  is  one  of  the  most  widely  used  and 
effective  means  of  making  the  shipper  let  rival  lines  alone. 
Carriers  make  an  agreement  with  the  shipper,  promising  to  re- 
turn to  him  5  or  10  per  cent  rebate  of  the  freight  he  pays,  pro- 
viding he  ships  by  no  other  than  conference  lines.  The  rebates 
are  calculated  for  a  period  of  three,  six,  or  even  twelve  months. 
They  are  held  for  six  months  more  before  being  paid,  so  that 

'  "In  addition  to  many  other  details,  the  agreement  provides,' in  article  10, 
that— 

The  port  of  Havre  is  especially  reserved,  both  for  freight  and  passenger 
business,  by  direct  line  to  and  from  the  United  States  and  Canada,  to  the 
Transatlantique.  All  other  French  Atlantic  and  Channel  ports,  w^ith  the 
exception  of  Cherbourg  and  Boulogne,  will  be  also  reserved  to  the  Trans- 
atlantique, but  only  as  far  as  passenger  business  by  direct  line  to  and  from 
the  United  States  and  Canada  is  concerned. 

Article  11  stipulates  that — 

The  Transatlantique  binds  herself  not  to  call  at  any  port  between  Cron- 
stadt and  French  frontier,  either  for  freight  or  passenger  business,  except 
with  the  previous  consent  of  the  N.  D.  L.  V.  lines. 

Article  12  provides  that — 

Passengers  from  Scandinavia  and  Finland  shall  not  be  considered  in  any 
way  in  this  cgntract,  and  the  Transatlantique  shall  not  engage  passengers  in 
these  countries." 

S.  S.  Huebner,  Report  on  Steamship  Agreements  and  Affiliations  in  the 
American  Foreign  and  Domestic  Trade,  1914.  vol.  4,  pp.  29-30.  U.  S.  House 
of  Representatives,  63d  Cong.,  Committee  on  Merchant  Marine  and  Fisheries. 
This  book  is  an  invaluable  storehouse  of  accurate  information. 


ORGANIZATION    OF    WORLD    SHIPPING    BEFORE    THE    WAR         13 

the  carriers  always  have  a  club  (deferred  rebates)  over  the 
head  of  the  shipper.  He  forfeits  this  rebate  money  if  he  ships 
even  one  box  of  matches  by  a  rival  line.  Naturally  this  kind 
of  control  is  more  efifective  in  the  long  lines  of  service  like 
that  from  New  York  to  Africa  and  Australia  than  in  short  lines, 
because  of  the  greater  difficulty  of  the  rival  line  offering  adequate 
service.  If  a  shipper  gets  at  outs  with  the  conference  carriers, 
he  may  be  at  their  mercy,  and  the  rival  who  tries  to  break  in 
has  great  difficulty  in  offering  as  good  service  as  the  existing 
conference  lines  together  can  give,  so  the  position  of  the  lines  is 
strong. 

(b).  Fighting  ships  are  the  most  easily  effective  means 
whereby  the  conference  beats  off  the  rival  who  tries  to  get  in. 
The  Germans  have  perhaps  carried  this  thing  to  a  greater  degree 
of  organization  than  any  other  nation,  in  that  six  German  com- 
panies formed  a  corporation  known  as  a  fighting  corporation, 
which  owned  four  small  steamships  and  chartered  others  as 
occasion  arose.  If  a  rival  started  a  competing  service  to  any 
of  the  conference  lines,  the  fighting  corporation's  ship  came 
alongside,  announced  the  same  sailing  day,  the  same  ports  and 
proceeded  to  cut  rates  far  beyond  the  limit  of  profit. 

I  remember  as  a  small  boy  reading  with  wide  stretched  eyes 
a  highly  colored  account  of  a  combat  between  a  diver  and  an 
octopus.  The  huge  eight-armed  monster  of  the  deep  reached 
out  one  arm  and  seized  the  diver's  right  wrist.  With  a  second 
arm  he  seized  the  diver's  left  wrist.  With  the  third  arm  he 
throttled  him,  and  still  had  five  arms  left  to  hold  tight  to  the 
sunken  wreck,  while  he  strangled  the  diver.  In  this  fighting 
ship  of  the  six  great  German  corporations  we  see  an  exact  dupli- 
cate of  the  many-armed  octopus.  The  six  great  companies 
could  easily  afford  to  lose  on  the  little  fighting  corporation, 
which  would  kill  one  aspiring  rival  after  another,  while  between 
times  its  ships  would  be  chartered  out  on  short  time  charters 
on  profitable  work  if  there  was  any,  or  even  chartered  by  some 
of  the  various  lines  that  owned  the  fighting  corporation.  The 
fact  that  the  free  sea  can  produce  such  tight  shipping  trusts 


14  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

explains  the  great  absence  of  foreign  shipping  lines  from  Ger- 
man ports,  and  the  wide  reach  of  the  German  shipping  lines  over 
all  oceans. 

The  two  leading  German  companies,  Hamburg-American  and 
North  German  Lloyd,  in  guarding  their  territory  from  com- 
petition, have  not  only  driven  and  kept  rivals  away  from  their 
own  ports,  but  for  the  last  forty  years  the  establishment  of 
services  to  Scandinavia,  except  by  Scandinavians,  has  been  re- 
garded as  undue  and  unpermissible  encroachment,  because  it 
might  carry  directly  the  goods  handled  by  transshipment  through 
Hamburg  and  Bremen,  especially  Hamburg. 

(c).  Long  time  contracts  with  shippers  serve  to  hold  their 
trade  during  the  existence  of  the  contract. 

(d).  Contracts  with  railroad  companies  are  very  common  in 
the  American  trade,  and  their  object  is  usually  to  put  the  trade 
brought  by  a  certain  railroad  from  a  certain  region  into  the 
hands  of  certain  steamship  companies.^ 

Despite  all  the  methods  of  scaring  away  the  outsider,  rate 
wars  have  been  common  occurrences.  Like  the  initial  price  of 
ships  so  the  cost  of  a  rate  war  was  a  part  of  the  cost  of  getting 
established  in  business — a  kind  of  initiation  fee  that  often 
amounts  to  a  million  or  more."  It  can,  however,  be  safely  said 
that  with  the  sea  as  with  the  land,  the  rate  war  has  declined  in 
frequency  in  recent  years,  due  to  the  increasing  thoroughness 
and  rigidity  of  the  organization  of  land  and  ocean  carrying. 

'  "  Judged  from  their  wording  most  of  the  agreements  have  brought  about 
a  close  preferential  alliance  between  vast  railway  systems,  controlling  the 
traffic  of  large  sections  in  the  interior  of  the  United  States,  and  important 
conference  steamship  lines,  which  is  bound  to  prove  a  powerful  aid  to 
the  preferred  water  carrier  as  compared  with  any  independent  line  not  thus 
allied." 

S.  S.  Huebner,  ofy.  cit.,  vol.  4,  p.  293. 

^  "  Moreover,  the  federated  lines  can  conduct  the  competitive  struggle  with 
the  comfortable  assurance  that,  following  the  retirement  of  the  competing 
line,  they  are  in  a  position  to  reimburse  themselves  thru  an  increase  ni 
rates.  To  allow  the  existence  of  conferences,  therefore,  generally  means 
giving  the  trade  to  the  lines  now  enjoying  it.  Only  a  powerful  line  can  hope 
to  fight  its  way  into  the  trade,  and  witli  the  inevitable  result,  if  successful, 
that  it  will  join  the  combination  or  be  allowed  to  exist  by  virtue  of  some 
rate  understanding." 

S.  S.  Huebner,  op.  at.,  vol.  4,  pp.  304-305. 


ORGANIZATION    OF    WORLD    SHIPPING    BEFORE    THE   -WAR         15 

Infortiial  Agreements. 

Perhaps  the  most  suggestive  thing  in  the  whole  list  of  lines 
relations  is  the  documentless,  even  wordless,  agreement  that 
works  so  surprisingly  well. 


Reference  should  here  be  made  (1)  to  the  tendency 
toward  oral  understandings,  instead  of  written  agreements, 
between  the  lines  operating  to  and  from  ports  of  the  United 
States,  and  (2)  the  care  which  has  been  exercised  to  pre- 
vent agreements  and  understandings  from  becoming  public. 
While  not  involving  as  strong  a  moral  obligation  as  written 
agreements,  the  evidence  shows  that  for  all  practical  purposes 
oral  arrangements  are  quite  as  efifective.  Judging  from  the 
manner  in  which  the  lines  observe  the  same,  the  existing 
oral  understandings  give  unmistakable  evidence  of  the  high 
order  of  integrity  prevailing  in  modern  business,  and  justify 
fully  the  phrase  "  gentlemen's  agreements."  Written  agree- 
ments seem  to  have  accomplished  their  purpose  in  many 
cases  and  are  apparently  no  longer  needed.  The  lines  in 
some  instances  need  not  even  meet  in  conference;  they  may 
avoid  every  appearance  and  every  act  which  would  seem  to 
show  the  existence  of  an  agreement  or  understanding;  and 
yet  operate  in  the  same  spirit  of  harmony  that  would  pre- 
vail if  a  written  agreement  existed.  There  is  still  friendly 
rivalry  in  procuring  business,  but  this  business  is  secured 
at  not  less  than  certain  understood  rates.  Again,  in  nearly 
all  of  the  few  trades  where  agreements  or  understandings 
have  been  denied  by  all  the  interested  lines,  a  remarkable 
uniformity  in  rates  seems  to  exist  and  not  a  trace  of  a  rate 
war  can  be  found.  The  situation  has  been  explained  to  the 
committee  as  one  of  "  following  the  leader,"  the  dominant 
carrier  fixing  the  rates  and  the  less  important  lines  adopt- 
ing these  rates,  they  being  allowed  to  exist  in  the  trade  with- 
out having  an  effective  fight  w^aged  against  them,  as  long 
as  they  conform  to  the  rates  and  conditions  established  by 
the  dominant  carrier. 

Where  written  agreements  govern  the  rates  and  methods 
of  the  lines,  the  terms  of  the  agreements  have  been  guarded 
with  the  utmost  secrecy.^ 

S.  S.  Huebner,  op.  cit..  vol.  4,  pp.  293-294. 


16  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Perhaps  the  force  of  these  understandings  might  instead  have 
been  pointed  out  as  an  evidence  of  the  great  losses  that  occurred 
from  rate  wars. 

Such  in  brief  was  the  condition  of  competition  upon  the  free 
sea  at  the  beginning  of  the  Great  War.  These  shipping  organiza- 
tions were  among  the  most  international  of  man's  affairs.  The 
fact  that  the  sea  is  free  meant  that  the  shipping  combine  could 
sail  all  seas  and  reach  the  ports  of  all  worthwhile  lands.  Few 
things  could  better  illustrate  the  supreme  internationality  of  the 
sea  and  its  trade  than  the  fleets  of  Norwegian  banana  boats  ply- 
ing between  the  United  States  and  the  Caribbean,  or  the  Eng- 
lish and  German  lines  fighting  each  other  almost  to  the  death 
for  the  privilege  of  carrying  the  trade  between  United  States 
and  Brazil,  and  then  when  the  struggle  ended  dividing  the  trade 
up  among  themselves  with  mathematical  exactness. 

Our  Attitude  toward  Shipping  Agreements 

It  is  probably  true  that  the  average  American  has  a  sense  of 
opposition  to  this  wide  reaching  and  well-nigh  universal  shipping 
control  by  agreement.  Yet  a  further  examination  shows  that 
in  a  way  it  helps  to  bring  to  pass  a  condition  for  which  many 
of  us  have  a  prejudice :  namely,  the  condition  of  the  survival  of 
many  small  units  rather  than  the  creation  of  one  large  unit,  for 
it  is  a  fact  that  the  rate  agreement  keeps  the  small  carrier  alive, 
whereas  competition  means  monopoly  through  the  elimination 
of  the  weakest. 

Attitude  of  the  Shippers  toward  Shipping  Agreements 

The  attitude  of  the  shippers  in  line  traffic  is  less  venomous  to 
conferences  than  we  might  at  first  expect.  The  conference  rates 
are  stable  rates,  and  stability  of  rates  is  very  important  for  the 
development  of  the  export  trade  in  which  men  have  to  quote 
prices  for  goods  delivered  at  future  dates.  During  a  period  of 
competition  the  exporter  is  continually  receiving  complaints  from 
his  customers  in  foreign  countries  because  one  man  gets  goods 


ORGANIZATION    OF    WORLD    SHIPPING    BEFORE    THE    WAR  17 

from  this  week's  steamer  at  a  certain  price  and  the  rate  on  his 
rival's  goods  on  next  week's  steamer  may  be  lower  and  the 
customer  objects  to  his  rival  getting  this  low  price.  The  con- 
ference places  all  shippers  on  the  same  basis,  just  as  the  public 
railway  rate  of  America  when  adhered  to  puts  us  on  the  same 
basis  and  gives  none  of  us  the  advantage  of  a  railway  rebate. 
Many  ocean  shippers  aver  they  would  prefer  high  uniform  rates 
for  all  rather  than  low  but  fluctuating  rates.  The  peacefully 
working  conference  gives  a  much  better  distribution  of  sailing 
days  than  three  or  four  warring  lines  which  may  send  off  three 
competing  steamers  on  the  same  Saturday  and  then  none  for  a 
fortnight. 

The  Necessity  of  Government  Interference 

Despite  these  advantages  to  the  shipper  the  agreements  of 
carriers  produced  a  situation  fraught  with  problems — a  condi- 
-tion  that  democratic  legislatures  did  not  look  upon  with  favor. 
The  control  of  world  shipping  was  rapidly  working  around  to 
the  place  where  governments  would  have  had  to  take  some 
action  for  the  protection  of  individuals.  The  competitive  system 
had  largely  ended,  so  far  as  line  traffic  was  concerned,  and  one 
need  look  no  further  than  the  historic  facts  of  human  nature  to 
know  that  seeds  of  trouble  lay  in  the  secret  monopolies,  under 
the  name  of  shipping  conferences,  that  practically  encircled  the 
world.  These  conferences  were  in  the  nature  of  a  monopoly, 
and  one  need  scarcely  cite  history  to  prove  that  monopoly,  carry- 
ing unlimited  authority,  is  one  of  the  things  that  the  human 
being  is  incapable  of  using  humanely.  So  much  power  turns  his 
head,  and  it  has  been  found  to  do  so  in  all  ages  and  in  all  climes, 
whether  in  ancient  Egypt,  modern  Mexico,  Germany  or  New 
York.  The  shipping  conference  has  many  advantages,  but  even 
in  times  of  congressional  investigation,  shippers  are  loath  to  com- 
plain,^ for  fear  of  some  form  of  retaliation.  Occasionally  one 
can  be  found  to  speak  out  and  say  that  carriers  have  become  un- 

'  S.  S.  Huebner,  op.  cit.,  vol.  4,  pp.  309-314. 


18  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

reasonably  slow  in  settling  damage  claims,  unreasonably  care- 
less in  the  handling  of  goods,  that  they  advance  rates  without 
due  notice.  Shippers  claimed  that  once  the  authority  of  car- 
riers is  unquestioned,  it  is  apt  to  develop  into  unfair  favoritism 
for  some  large  corporation  or  friend,  to  the  detriment  of  other 
shippers.  Exhaustive  investigations  made  by  a  committee  of 
Congress  in  1914  ^  show  conclusively  that  it  is  widely  believed 
by  those  in  a  position  to  know  that  some  form  of  government 
aid  is  necessary  to  protect  the  individual  from  this  strong  or- 
ganization of  carriers,  and  the  analogy  between  railroads  and 
ships  is  carried  out  by  the  uniformity  with  which  these  recom- 
mendations refer  to  the  sufficiency  of  publicity.  It  will  be  re- 
membered that  railroad  control  began  first  by  public  rates,  then 
by  rate  regulation,  and  we  are  now  moving  rapidly  toward 
government  ownership.  The  analogy  with  shipping  is  striking. 
When  the  war  is  over,  the  history  of  prewar  conditions  must 
form  the  background  of  the  intelligent  settling  of  the  questions 
that  will  arise  in  the  reorganization  of  the  world's  carrying 
trade. 

Ocean   Freight   Rates 

The  story  of  the  combination  of  line  carriers  is  not  yet  all 
told.  Ocean  rates  must  be  understood.  In  this  respect  we  can 
not  understand  line  traffic  and  its  rates  until  we  understand  the 
tramp  traffic  and  its  rates.  In  the  tramp  traffic  where  the  single 
ship  is  operated  independently  on  the  absolutely  free  highway 
of  the  world,  we  do  really  find  the  competitive  rate  giving  us  a 
full-fledged  example  of  that  freedom  which  we  would  theoreti- 
cally expect. 

If  freight  is  scarce,  the  ships  compete  for  it,  and  down  go  the 
rates.  If  ships  are  scarce,  the  shippers  compete  for  them,  and 
up  go  the  rates.  The  term  "  semi-piratical,"  as  applied  to  the 
shipping  business  by  one  of  its  own  devotees,  is  not  entirely  un- 
merited; for  there  is  in  the  tramp  traffic  no  shadow  of  that 

'  S.  S.  Huebner,  op.  cit.,  vol.  4,  pp.  309-314. 


ORGANIZATION    OF    WORLD    SHIPPING    BEFORE    THE    WAR         19 

shibboleth  of  the  land,  namely,  a  fair  and  reasonable  rate.  If 
ships  are  plenty,  they  are  cheap,  the  rate  goes  down,  down,  down 
to  the  point  of  operation  at  cost,  which  may  be  said  to  include 
wages,  maintenance,  depreciation,  overhead  charge,  and  reason- 
able interest.  The  rates  will  go  down  until  there  is  no  money 
for  interest,  no  money  for  depreciation,  sometimes  even  no  money 
for  maintenance;  for  it  seems  to  be  well  established  that  there 
have  been  long  periods  when  ships  have  been  operated  at  a  dead 
loss,  the  only  limit  being  the  decision  of  the  carrier  to  tie  up 
his  ships  rather  than  take  the  existing  rate.  On  the  other  hand 
the  present  war  has  shown  again  the  well  established  fact  that 
the  carrier  also  knows  no  limit  when  he  gets  the  shipper  on  the 
hip.  Rates  will  go  up,  doubling,  tripling,  quadrupling,  quintu- 
pling, until  the  limit  is  the  absolute  inability  of  shippers  to  pay. 

Perhaps  someone  asks  why  the  tramp  ship  owners  do  not  com- 
bine when  rates  get  so  low.  The  answer  is  that  the  temptation  to 
stay  out  of  the  combination  and  reap  the  advantages  rather  than 
stay  in  it  and  pay  the  cost  is  too  great  for  human  nature,  espe- 
cially when  that  human  nature  lives  in  such  different  and  far 
separated  breasts  as  those  of  the  Japanese,  Hindu,  Greek,  Nor- 
wegian, German,  Englishman  or  American.  The  Parliament 
of  man  is  simpler  than  this.  Suppose  the  world  needs  85  per 
cent  of  the  existing  shipping,  and  suppose  90  per  cent  of  the 
existing  shipowners  agree  to  combine  for  a  certain  rate  or  tie 
up  their  ships.  It  should  be  a  profitable  rate,  or  it  is  scarcely 
worth  doing.  The  10  per  cent  of  outside  shippers  would  cut 
1  per  cent  under  it,  and  be  as  busy  as  they  could  be  while  the 
agreeing  shippers  would  have  15  per  cent  of  the  world's  ship- 
ping idle  on  their  hands.  The  picture  of  an  agreed  upon  rate 
sets  the  tramp  ship  owners  talking  in  every  depression;  but  the 
facts  of  free  competition  have  always  kept  them  from  attaining 
any  substantial  result  in  the  various  feeble  attempts  at  rate 
combination  that  they  have  attempted.^ 

'  See  J.  Russell  Smith :  Ocean  Carrier,  pp.  235-255,  for  discussion  of 
theory  and  history  of  attempts  at  rate  control.  Also  Fairplay,  London, 
lebruary  and  June,  1914. 


20  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Upon  the  whole,  tramp  traffic  had  not  been  particularly  profit- 
able for  the  ten  years  before  the  Great  War.  From  1899  to  1901, 
the  shipowners  had  a  golden  age,  the  period  of  the  Boer  War, 
when  Britain,  conducting  a  campaign  G,000  miles  from  home, 
needed  large  cjuantities  of  shipping  and  took  it,  making  a  scarcity 
that  sent  rates  soaring.  The  exorbitant,  profits  of  the  owners 
caused  enormous  building  of  new  ships  which  came  upon  the 
sea  in  1901  and  1902  at  the  same  time  that  the  end  of  the  war 
caused  the  British  Government  to  release  its  chartered  vessels, 
with  the  result  that  rates  fell  with  a  crash.  They  stayed  at  a 
low  figure  for  years. ^  There  was  one  short  respite  when  rates 
rose  to  a  good  figure  in  1912  and  191-3,  but  upon  the  whole  hope 
seems  mostly  to  have  run  ahead  of  realization  in  the  tramp 
traffic  and  overbuilding  kept  the  rates  down.  The  editor  of  one 
of  their  journals  said  in  August,  1914: 

I  have  repeatedly  shown  that  the  shareholders  in  British 
shipping  would  be  better  off  now  if  they  had  invested  their 
money  in  good  4  or  5  per  cent  securities.^ 

The  Influence  of  Tramp  Rates  on  Line  Rates 

It  is  true  that  line  traffic  and  tramp  traffic  differ,  but  if  the  sea 
is  full  of  starving  tramps,  line  traffic  can  not  escape  the  influence 
of  their  low  rate.  It  may  seem  preposterous  to  say  that  great 
passenger  steamers  of  the  North  Atlantic  must  give  a  low  rate 
because  of  the  possible  competition  of  the  passengerless  un- 
known tramp  that  must  remain  tied  up  to  the  wharf  at  Lisbon  or 
Calcutta,  but  none  the  less  that  idle  tramp  is  an  influence  through- 
out the  world.  Ocean  commerce  is  a  world  commerce.  The 
tramp  rate  is  a  world  rate.  Line  traffic  is  different  from  tramp 
traffic,  yet  it  is  not  a  world  to  itself.  The  tramp  can  not  com- 
pete with  the  great  express  passenger  liner.  Yet  the  passenger 
liner  must  carry  freight  too.  Then  there  are  freight  liners,  lots 
of  them,  and  the  service  tapers  down  to  the  point  where  it  fuses 
with  the  tramp  traffic.     Much  of  the  world's  line  traffic  is  done 

'  See  J.  Russell  Smith,  op.  cit.,  pp.  235-255,  for  examples  of  unprofitable 
ship  operation. 

'  F airplay,  August  27,  1914,  p.  371. 


ORGANIZATION    OF    WORLD    SHIPPING    BEFORE    THE    WAR  21 

in  vessels  which  are  tramp  today,  liner  tomorrow,  because  a 
line  has  chartered  them  for  a  voyage  or  a  season.  Thus  the 
lines  can  at  any  time  increase  their  service  by  taking  on  tramps, 
and  the  unprofitable  or  unemployed  tramp  is  ever  tending  to 
break  into  the  line  traffic. 

Putting  a  Vessel  on  the  Berth 

The  practice  of  ship  brokers  in  "  putting  a  vessel  on  the  berth," 
shows  the  constant  menace  of  the  tramp  to  the  line.  The  broker 
announces  that  on  a  certain  date  a  certain  ship  will  sail  from 
Calcutta  to  Liverpool.  Then  he  busily  seeks  the  whole  port 
through  to  find  traffic  to  load  her  in  competition  with  any  and 
all  lines  that  may  be  there.  Large  shippers  always  have  the 
possibility  of  loading  a  tramp  themselves,  and  since  the  chief 
hold  of  the  liners  is  a  deferred  rebate  of  10  per  cent  it  is  quite 
possible,  if  their  rates  are  too  high,  that  it  will  pay  the  shipper 
to  lose  the  10  per  cent  and  take  advantage  of  a  tramp  vessel,  or  of 
the  vessel  loading  at  the  berth.  Thus  we  really  have  a  world  rate 
for  shipping.  The  widely  fluctuating  tramp  rates  in  the  main 
run  in  great  curves  from  high  to  low,  with  the  line  rates  follow- 
ing in  their  wake.  This  influence  has  been  graphically  stated  by 
the  editor  of  the  British  marine  journal  Fairplay,  in  the  spring 
of  1917: 

But  as  a  matter  of  fact,  so  far  as  monopolies  are  con- 
cerned, the  biggest  combine  on  record,  that  engineered  by 
Mr.  Pierpont  Morgan,  was  a  fiasco,  for  not  only  was  it 
not  able  to  force  high  freights  in  order  to  pay  dividends 
on  the  inflated  capital,  but  for  fourteen  or  fifteen  years  it 
could  not  even  earn  enough  to  provide  for  depreciation  and 
interest  on  debentures.  What  happened  in  1901  will  always 
happen  again — the  tramp  cargo  boat  will  always  dominate 
the  situation.  If  there  are  more  cargoes  than  ships,  high 
freights  will  have  to  be  paid.  If  there  are  more  ships  than 
cargoes,  the  shipowners  will  have  to  accept  what  is  offered, 
or  lay  up  their  vessels. 

The  same  philosophy  is  clearly  put  in  a  report  submitted 
by  a  New  York  committee  of  conference  line  representatives  be- 


•22  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

fore  a  committee  of  Congress  in  which  they  maintain  in  defense 
of  the  charge  that  their  rates  were  too  high,  that 

prior  to  1911,  freight  rates  had  dropped  to  a  figure  previ- 
ously unknown,  entaiHng  heavy  losses  on  the  regular  lines, 
which  had  the  choice  of  continuing  their  services  or  with- 
drawing from  the  business  in  which  they  had  long  been  en- 
gaged. Competition  among  tramp  owners  produced  a  low 
level  of  rates,  and  as  soon  as  the  world's  trade  got  ahead  of 
the  tonnage  available  (referring  to  the  rise  in  rates  of 
1912)  tramp  steamers  were  put  in  a  position  where  they 
could  advance  their  rates  beyond  anything  that  had  been 
experienced  in  recent  years. 

It  is  also  the  contention  of  the  conference  line  representatives 
that,  in  the  enormous  rise  in  ocean  rates  during  recent  years, 
the  rates  charged  by  the  regular  lines  at  no  time  rose  to  the 
level  of  the  tramp  freight  market,  and 

were  less  than  what  the  regular  lines  could  have  earned 
if  they  had  withdrawn  their  steamers  from  their  established 
services  and  chartered  or  placed  them  in  other  trades. 

As  showing  the  enormous  rise  in  the  charter  rates  of  tramp 
steamships,  not  working  under  any  agreement  or  conference,  the 
following  represents  in  part  the  data  furnished  by  the  New 
York  committee.     It  was  before  the  war. 

Illustrations. 

Petroleum  in  cases  from  New  York  to  four       Increase  in  the  rate  from  17c 
ports  in  Australia.  per  case,  June,  1908,  to  35c 

in  Feb.,  1913. 
Lumber  from  the  Gulf  to  the  River  Plate.       95/  per  standard  in  Nov.,  1908 

—125/  in  Sept.,   1911,  and 

192/6  in   Nov.,   1912.     ■ 
Cotton  from  the  Gulf  to  United  Kingdom,       8/6  per  ton  d.w.  of  steamer  in 
or  Continent  on  net  from  charters.  Nov.,  1908,  to  25/  in  Nov., 

1912. 
Sugar  from  Cuba  to  New  York.  7c  per  100  lbs.  in  Jan.,  1908,  to 

17c  in  Nov.,  1912. 
Time  charter  from  Baltimore  to  Glasgow.         3/3    per    ton     of    total     dead 

weight    capacity    in    Aug., 

1908,  to  8/6  in  Aug.,  1913. 
Full   cargoes   of   grain    from    Baltimore   to       1/3  per  qr.  of  480  lbs.  in  Sept., 
Rotterdam.  1908,  to  3/6  in  Jan.,  1913. 


ORGANIZATION    OF    WORLD    SHIPPING    BEFORE    THE    WAR  23 

To  appreciate  what  these  rates  mean,  think  of  ordinary  busi- 
ness having  its  costs  remain  the  same  and  the  income  increase 
from  100  to  280. 

Freight  Depression  of  1914 

The  Great  War  broke  in  a  period  of  low  rates  and  depression 
among  shipowners.  In  February,  1914,  and  again  in  June  the 
shipping  journals,  Lloyd's  Weekly  and  F airplay,  were  discussing 
the  ever  present  golden  dream  of  the  depressed  shipowner, 
namely,  the  possibility  of  an  agreement  to  raise  tramp  rates,  and 
they  came  to  the  usual  conclusion  that  it  could  not  be  done,  de- 
spite the  fact  that 

Depression  in  the  shipping  trade  has  followed  so  swiftly 
on  the  heels  of  a  remarkable  boom  that,  almost  before  ship- 
owners have  had  time  to  realize  it,  freights  have  touched 
an  unprofitable  level.  Steamers  are  being  laid  up  at  cer- 
tain ports  in  steadily  increasing  numbers.  .  .  .  Seventy 
Greek  boats  are  laid  up  in  the  principal  ports  of  Greece, 
and  many  Scandinavian  vessels  are  idle  at  the  buoys,  as 
well  as  a  large  number  of  British  vessels  in  our  own 
ports.  ...  At  the  present  time  vessels  of  all  nations  are  laid 
up,  for  the  simplest  reason  that  there  is  no  need  for  them.^ 

In  June  a  British  tramp  sailed  in  ballast  from  Australia  to  South 
Africa,  from  South  Africa  to  Montevideo,  and  then,  still  search- 
ing, continued  her  empty  wanderings  to  Barbadoes.  In  July  the 
shipowners  were  preparing  themselves  for  a  period  of  long  de- 
pression, and  the  question  was,  "how  long  would  it  last?"' 
Lloyd's  Weekly,  August  21,  page  547,  predicted  that  the 
year  1914  would  go  down  as  the  blackest  in  shipping  his- 
tory generally,  and  referred  to  anticipated  loss  of  earnings  and  to 
the  prospects  of  the  steel  makers  shutting  down  their  plants  be- 
cause shipbuilders  would  not  buy  plates.    The  lines  in  the  cargo 

'  Lloyd's  Wccklw  February  20,  1914,  pp.  120-121. 
■  Fairplay,  August,  1914,  p.  345. 


24  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

trade  between  Scotland  and  Canada  and  the  United  States  were 
reducing  their  sailings,  and  similar  accounts  of  depression  were 
to  be  had  from  nearly  all  parts  of  the  world. 

The  Bitterness  of  International  Competition 

Into  this  period  of  languid  hopelessness  broke  the  war,  but 
it  did  not  break  upon  complete  international  pleasantness  in  the 
world  of  shipping.  Agreements  among  carriers  do  not  always 
mean  pleasantness.  They  may  be,  and  usually  are,  like  the 
treaties  that  end  any  war,  for  such  indeed  they  usually  are. 
During  the  summer  of  1914  a  bitter  rate  war  between  the  Ger- 
man and  English  lines  to  Buenos  Aires  reached  a  crisis.  For 
some  time  it  had  been  true  that  every  time  the  one  built  a  ship 
the  other  built  a  ship  and  started  a  new  one,  until  in  July  two 
German  vessels  had  been  tied  up  for  want  of  traffic. 

The  shipping  situation  between  these  two  great  rivals,  Britain 
and  Germany,  reflected  the  facts  of  their  national  genius,  namely 
individualism  versus  organization.  The  tramp  ship  is  an  indi- 
vidual task,  a  business  unit.  It  is  owned  by  a  man,  operated 
by  a  man.  In  this  field  Germany  has  played  no  important  part, 
while  English  owners  with  their  fleets  of  ten  to  thirty  boats  have 
carried  much  of  the  bulk  freight  of  the  world.  In  contrast  to 
this,  the  line  is  a  great  organization,  a  cooperative  enterprise, 
one  in  which  governments  can  well  and  efifectively  help,  and  one 
in  which  the  German  Government  has  helped  much  more  than 
has  the  English  Government.  This  means  organization,  in  which 
Germany  is  strong,  in  contrast  to  individual  liberty  and  initiative, 
in  which  England  has  led  the  civilized  world.  We  can  see  its 
results  in  the  fact  that  the  Hamburg-American  Company  with 
seventy  services  was  by  far  the  widest  reaching  carrier  upon  the 
face  of  the  world  oceans.  The  German  coasts  were  almost 
clear  of  foreign  lines,  yet  German  liners  stopped  at  the  ports  of 
almost  every  other  country,  as  witnessed  by  the  following  bitter 
lament  of  the  editor  of  Fairplay,  December  24,  1914,  page 
1001: 


ORGANIZATION    OF    WORLD    SHIPPING    BEFORE    THE    WAR  'lo 

Our  enemy  was  fast  Germanizing  the  world,  and  bid  well 
to  drive  our  mercantile  marine  off  the  seas,  so  far  as  profit- 
able trading  was  concerned.  We  certainly  thought  it  a 
disgrace  to  this  country  for  German  liners  to  be  leaving 
here  for  our  colonies,  to  say  nothing  of  the  humiliation  of 
being  driven  completely  out  of  certain  trades. 

In  a  thing  so  evenly  balanced  as  must  be  the  trade  of  the  free 
sea,  it  becomes  plain  on  a  little  reflection  that  the  influence  of 
governmental  action  will  be  prepotent  whether  for  aid  or  in- 
jury. What  will  happen  after  the  war?  It  will  end  with  the 
nations  themselves  in  control  if  not  in  possession  of  their  mer- 
cantile marines.  What  will  be  the  policy  of  the  nations  in  oper- 
ating these  fleets  ?  Will  they  promptly  hand  them  back  to  private 
owners?  Will  they  operate  them  themselves,  or  will  they  take 
a  middle  ground  of  direction,  subsidy,  or  other  financial  sup- 
port? In  any  case  a  host  of  problems  present  themselves.  We 
can  not  expect  a  chaos  of  unending  competition  and  rate  wars 
between  the  nationally  supported  steamship  lines,  but  the  Ger- 
man experience  seems  to  indicate  that  the  lines  which  have  the 
most  government  support  will  in  the  end  be  able  to  win  out  over 
lines  that  lack  such  advantages.  Certainly  we  shall  need  a  care- 
fully thought  out  marine  policy.  Fortunately  we  shall  have  a 
little  time  to  think,  for  the  early  peace  period  of  months  or  years 
will  be  a  period  of  pinching  ship  shortage  when  all  the  world 
will  strive  against  necessity.  The  first  strife  will  be  against  the 
vacuum  made  by  the  submarine.  When  this  is  filled  and  ships 
begin  to  hang  at  the  buoys  waiting  for  a  call,  at  starvation  rates, 
we  shall  then  have  a  very  real  problem  to  face.  Before  that 
time  arrives,  we  shall  need  to  have  formulated  a  policy  that  shall 
not  be  the  policy  of  the  landsman  that  America  has  thus  far  in- 
sisted on  being. 


CHAPTER  II 

The  World's  Shipping  Industry  during  the  War — Brief 
Summary  with  Special  Emphasis  on  Freight  Rates 

An  End  of  Freedom  on  the  Seas 

Then  came  the  war,  and  now  all  is  changed  in  this  world  realm, 
the  sea.  No  more  is  it  the  place  for  individualism,  for  freedom 
to  do  as  one  pleases,  to  come  and  go,  compete,  combine,  cut 
rates,  make  commercial  war.  War  of  blood,  iron,  and  death  has 
swallowed  up  rate  war  and  freedom;  every  vestige  of  both  is 
gone.  Laissez  faire  no  longer  operates  upon  the  sea.  It  may 
some  day  return,  but  today  (May,  1918)  no  shadow  of  it  remains. 
Iron  rules  prevail,  covering  the  operations  of  the  world's  ships 
and  of  shipowners.  Without  the  consent  of  government  you 
may  not  now  buy  or  sell  a  ship,  nor  build  one.  Without  con- 
sent of  government,  you  can  not  hire  nor  sail  her,  nor  buy  coal 
for  her  bunkers,  nor  take  a  single  piece  of  freight.  Although 
you  may  have  owned  the  ship  for  twenty  years,  now  you  may 
not  even  set  the  rate  for  her  services.  The  ships,  the  ship- 
owners, and  the  shippers,  have  become  an  army,  and  as  with 
armies,  so  now  it  is  with  ships — you  do  as  you  are  told. 

How  has  this  change  come  about  ? 

Paralysis  of  Trade  at  the  Beginning  of  the  War 

The  war  fell  on  a  world  oversupplied  with  shipping.  Ship- 
owners, like  everybody  else,  were  stunned  by  the  explosion,  and 
the  war  itself;  their  industry  had  a  paralysis — a  quadruple 
paralysis. 

(a)  Vessels  arriving  in  British  ports  found  the  financial  con- 
dition so  disturbed  by  war  that  there  was  no  cash  with  which 
to  pay  freights.     Therefore  owners  would  not  release  cargoes, 

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28  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

and  vessels  lay  idly  at  the  docks.     For  two  months  this  paralysis 
lasted. 

Ships  here  [N.Y.]  can  not  obtain  cargoes  for  the  reason 
that  American  shippers  are  not  convinced  that  they  can  get 
quick  payment.  ...  Until  the  state  of  the  financial  market 
is  improved  there  will  continue  to  be  hundreds  of  vessels 
lying  idle  at  the  docks. ^ 

(b)  Meanwhile  German  raiders  had  almost  closed  distant  seas, 
such  as  the  South  Pacific,  the  South  Atlantic,  and  the  Indian 
Ocean  where  the  famous  Eindcn  ran  her  wild  and  destructive 
career.  For  many  days  the  raiders  reaped  a  harvest  of  British 
shipping.  It  is  not  surprising  that  on  the  6th  of  August  the 
British  ship  charter  market  was  reported  {Fair play)  to  be  "  ab- 
solutely dead."  and  on  the  12th  Syren  and  Shipping  declared 
"  Chartering  has  come  to  a  complete  standstill  in  all  the  trades 
of  the  world." 

(c)  Owing  to  the  danger  of  destruction  by  raiders,  under- 
writers virtually  refused  to  insure,  and  as  insurance  is  one  of 
the  unwritten  laws  of  the  sea,  no  shipowner  would  send  his  ship, 
no  shipper  would  send  his  freight.  The  consequent  tie-up  was 
almost  complete,  except  in  nearby  seas  where  the  British  Navy 
could  furnish  protection. 

Governments  rescued  shippers  from  the  insurance  dilemma. 
Within  three  weeks  all  leading  maritime  countries  had  given 
national  aid  in  the  insurance  market,  either  by  direct  govern- 
ment insurance  or  by  subsidizing  private  enterprise. 

{d)  This  enabled  the  shipping  business  to  resume,  but  the 
business  is  a  speculative  one,  and  the  world's  mind  was  unsettled 
- — the  attention  of  everybody  was  fixed  on  the  great  drama  in 
northern  France.  As  there  are  in  normal  times  stocks  enough  on 
hand  for  a  short  time,  business  languished,  for  no  one  knew 
whether  the  market  was  going  to  go  up  or  down,  whether  the 
war  would  be  long  or  short.  Ocean  freights  accordingly  de- 
clined even  from  their  unprofitable  July  level.  In  the  words  of 
a  London  shipowner  on  the  25th  of  August: 

'  Lloyd's  Weekly,  October  2,  1914,  p.  627. 


THE    SHIPPING    INDUSTRY    DURING    THE    WAR  29 

There  are  plenty  of  boats  ready,  but  no  cargo  to  lift.  If 
the  situation  continues  as  it  exists  today,  there  would  seem 
to  be  no  alternative  but  for  owners  to  lay  up  their  ships, 
pending  an  easier  tinancial  position  and  an  increase,  not  only 
in  freights,  but  also  in  the  volume  of  trade  moving.  And 
I  can  not  myself  see  this  improvement  coming  about  until 
the  war  is  over. 

One  must  remember  that  St.  Petersburg.  Gothenburg, 
Copenhagen.  Danzig,  Hamburg,  Stettin,  Emden,  Antwerp, 
Rotterdam,  and  Trieste,  are  practically  closed  to  trade. 
These  are  all  large  receiving  ports,  and  the  fact  that  they 
are  all  shut  down  means  that  some  of  the  largest  markets 
in  the  world  are  closed  to  shipowners. 

The  w^hole  of  the  Black  Sea,  too,  is  practically  shut  to 
commerce.    .    .    . 

With  all  these  ports  closed,  the  result  makes  itself  felt  at 
once  in  the  way  of  a  surplus  of  tonnage  for  a  largely  di- 
minished volume  of  business.  In  outward  business  char- 
terers are  reducing  rates  by  shillings  per  day.  Cardiff  to 
Rio,  for  instance,  dropped  3  shillings  at  one  fell  swoop. 
We  are,  as  a  matter  of  fact,  getting  down  to  a  level  of  rates 
that  would  have  been  cavilled  at  prior  to  the  war,  and  one 
fails  to  see  how  owners  .can  take  up  engagements  at  these 
figures  when  they  are  faced  with  heavy  war  risk  charges.^ 

On  the  7th  of  September  the  Germans  began  the  retreat  from 
the  Marne.  This  retirement  helped  maintain  the  early  conviction 
that  the  war  would  be  short.  October  was  filled  with  military 
uncertainty,  but  during  that  month  the  Germans  dug  in  on  the 
Aisne.  On  the  I7th  of  September  the  Dutch  lines  again  adver- 
tised sailings,  and  on  the  29th  of  October,  Fairplay  reported  that 
time  charter  rates  had  gone  up  a  shilling  a  ton  per  month.  But 
the  two  months  had  given  the  shipping  world  no  vision  of  what 
was  in  store  for  them.  About  the  20th  of  the  month  Messrs. 
Ropner  &  Co.,  British  shipowners,  sent  the  following  letter  to 
their  shareholders : 

Dear  Sir  or  Madam :  Possibly  some  of  our  shareholders 
are  wondering  what  effect  the  war  in  which  we  are  involved 

'  Lloyd's  Weekly,  August  28,  1914. 


30  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

is  having  on  the  shipping  industry,  and  we  think  it  is 
advisable  to  inform  them  that  the  position  at  present  is 
deplorable.^ 

A  little  later  the  Royal  Mail  Steam  Packet  Company  deferred 
dividends  because  of  the  heavy  expenses,  especially  insurance 
which  had  more  than  offset  increase  in  freight  rates  that  tney 
had  made.  The  International  Mercantile  Marine  also  decided 
to  defer  interest  on  bonds  for  the  same  reasons. 

In  early  November  the  English  attempt  to  turn  the  German 
flank  ceased  before  the  furious  attempts  of  the  German  army 
to  reach  Calais,  and  the  resulting  long  drawn  and  terrible  battle 
of  the  Yser  settled  the  conviction  that  the  war  would  be  long. 
It  was  also  discovered  by  this  time  that  the  war  was  a  matter 
of  artillery  and  materials.  Manufacturing  began,  and  a  revival 
of  trade  was  bound  to  follow,  and  prosperity  once  more  came 
to  the  sea. 

The  Revival  of  Trade  and  Shipping 

On  the  12th  of  November,  Fair  play  reported  rates  to  be  climb- 
ing day  by  day,  and  that  ship  values  had  doubled  in  a  month. 
The  British  settled  down  to  prepare  for  a  long  war.  As  the 
armies  increased  in  size,  the  government  requisitioned  more  ships 
to  carry  army  supplies,  and  the  shipping  world  began  to  realize 
what  was  involved  when  East  European  supplies  were  cut  off 
from  West  Europe.  It  means  increased  ship  business  instead  of 
reduced  ship  business,  for  it  means  more  distant  sources  of 
supply,  which  makes  more  ship  mileage.  The  case  of  Norway 
is  an  excellent  example.  Before  the  war  it  was  calculated  that 
250,000  tons  gross  of  shipping  was  sufficient  to  supply  Nor- 
wegian needs.  At  that  time  most  of  her  grain  came  from  Ger- 
many and  Russia,  but  by  the  end  of  1917  the  necessity  of  secur- 
ing her  supplies  in  distant  places  made  it  necessary  to  use  750,000 
tons  of  shipping  instead  of  250,000  tons.^  By  January.  1915, 
the  rates  had  risen  so  that  Fairplay  (Jan.  7,  1915),  the  champion 

I  Fairplay,  October  22,  1914,  p.  640. 

'  K.  F.  Knudson,  Glasgow  Herald,  December  29,  1917. 


THE    SHIPPING    INDUSTRY    DURING    THE    WAR  ^1 

of  the  shipowner,  was  deriding  those  theorists  who  were  talking 
of  fixing  maximum  rates  for  shipping.  The  next  week  higher 
rates  than  ever  before  known  were  reported.  In  another  week 
Fairplay  remarked  editorially  that  the  scarcity  of  tonnage  was 
becoming  more  and  more  serious  every  day,  especially  as  the 
Italians  were  furiously  bidding  for  ships  to  supply  their  needs. 

The  Ship  Famine  and  the  Ship  Prices 

The  relative  moderation  of  the  then  record  rates  of  January, 
1915,  can,  however,  be  seen  by  an  examination  of  what  followed. 
Thus  the  rate  on  cotton  from  United  States  to  Britain,  which  was 
25  cents  a  hundred  pounds  in  July,  1914,  rose  to  40  cents  in 
September,  50  cents  in  November,  $1  in  January,  1915,  $2 
in  April,  back  to  $1  in  July,  up  to  $3  in  January,  1916,  $5  in 
December,  1916.  These  figures,  unusually  high  though  they  are, 
have  now  been  exceeded.  In  January,  1918,  $7  a  hundred  was 
being  offered  for  so  heavy  a  commodity  as  syrup  in  barrels,  from 
North  Atlantic  ports.  United  States  to  London.  On  June  1,  1917, 
Lloyd's  Weekly  reported  400  shillings  a  ton  on  coffee  from 
Rio  Janeiro  to  Marseilles,  and  even  the  lowly  coal,  which  ordi- 
narily goes  out  at  almost  ballast  rates,  was  paying  125  shillings 
a  ton  from  United  States  to  Argentina. 

But  worse  was  yet  to  come.  In  October,  1917,^  600  shillings 
per  ton  were  paid  on  a  6,000  ton  cargo  of  rice  from  Burma 
to  Cette,  the  French  port  set  apart  for  the  Swiss. 

It  should  always  be  remembered  that  the  ocean  rates  are 
world  rates.  Thus  when  the  interallied  chartering  executives 
authorized  "  a  rate  of  47  shillings,  6  pence,  per  ton  per  month 
for  neutral  vessels  of  over  10,000  tons,  and  not  exceeding  52 
shillings  on  vessels  up  to  2,000  tons,  it  is  worthy  of  note  that 
there  had  been  six  weeks  before  a  50  per  cent  rise  in  rates, 
namely  from  40  cents  to  60  cents  a  hundred  pounds  for  the 
very  short  journey  across  the  South  China  sea  from  the  French 
port  of  Sigon  t9  Hong  Kong. 

I  Fairplay,  October  11,  1917.  p.  606. 
■  Lloyd's  Weekly,  February  2,  1917. 


32  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

In  September,  1917/  a  vessel  chartered  at  Buenos  Aires  for 
England  at  £20  per  ton,  sublet  part  of  the  space  the  next  week 
for  casks  of  tallow  at  £31  per  ton. 

In  November,  1917,^  an  offer  of  900  shillings  per  ton  from  the 
Philippines  to  Spain  failed  to  attract  a  vessel.  The  next  month 
an  8,300  ton  steamer  was  chartered  to  go  from  San  Francisco 
to  three  ports  in  Australia  and  return  for  the  sum  of  £100,000. 
enough  to  have  more  than  paid  the  cost  price  of  such  a  steamer 
in  1914.  Most  astounding  of  all  is  the  well  authenticated  case 
of  $1  per  pound  being  asked  and  obtained  on  parcel  freight  from 
New  York  to  Marseilles. 

The  awful  pressure  for  shipping  is  apparent  when  the  per- 
centage of  increase  in  the  rate  is  noted.  Ships  which  in  1914 
were  to  be  had  for  2  shillings  6  pence  per  ton  per  month,  in 
1917  were  bringing  47  shillings  6  pence — excellent  illustrations 
of  the  extent  to  which  extremes  of  competition  can  go  when 
demand  is  keen  and  supply  is  scarce. 

The  influence  of  these  rates  on  ship  prices  has  been  equally 
expansive.  The  price  of  a  ship  naturally  fluctuates  with  her 
earning  power.  As  evidence  of  this  a  British  firm  in  the  habit 
of  building  a  certain  standard  kind  of  2,250  ton  shelter  deck 
freight  vessel  for  sale  for  their  own  account,  reports  the  follow- 
ing prices : 

On  February  15,  1910,  the  company  would  have  been  only 
too  pleased  to  have  accepted  £17,500  for  a  vessel  of  this  type  ; 
on  the  1st  of  July,  1912,  they  asked  £22,500;  two  months 
later,  £26,750,  and  a  month  later,  £27,500.  On  August  30, 
1913,  their  price  had  dropped  to  £26,000.  On  November  3. 
it  was  £24,500,  but  by  May,  1914,  it  had  dropped  to  £21,500 
and  just  prior  to  the  war  only  £20,000  was  asked.  By 
November  3,  the  price  had  risen  to  £23,500  and  on  No- 
vember 25  to  £26,000.  On  the  8th  of  January,  1915,  they 
were  asking  £32,000  with  delivery  in  four  months,  which 
shows  an  advance  since  the  14th  of  June  of  no  less  than 
60  per  cent.^ 

*  Falrplay,  September  6,  1917. 

'  Lloyd's  Weekly,  November  16,  1917. 

*  Fairplay,  January  14,  1915,  p.  55. 


THE    SHIPPING    INDUSTRY    DURING    THE    WAR  66 

But  these  figures  are  very  moderate  in  comparison  to  the  later 
extremes  of  the  war. 

In  times  of  peace  British  freight  ships  ordinarily  cost  about 
£G  to  £7  per  ton  of  dead  weight  freight  carrying  capacity,  but 
in  the  spring  of  1917^  a  10,000  (d.w.)  steamer  building  in 
Union  Iron  Works,  San  Francisco,  and  about  ready  for  delivery 
was  reported  sold  for  £60  per  ton.  As  a  result  of  this  price 
Japanese  and  American  owners  with  vessels  under  way  for  de- 
livery October,  1917,  to  March,  1918,  who  had  been  willing  to 
sell  for  $200  per  ton,  withdrew  them  with  the  idea  of  securing 
$300  a  ton  when  nearly  ready  for  delivery.  As  speculators  they 
won,  for  the  ships  were  worth  $350  per  ton  in  the  early  months 
of  1918. 

The  prices  for  old  vessels  are  no  less  astonishing.  In  the 
summer  of  1917,  the  French  Government  paid  £475,000  for  r. 
ship  which  ten  years  ago  sold  to  the  Japanese  for  £32,000.  By 
all  the  rules  of  good  shipping  conduct  this  vessel  in  1911  was 
ready  for  breaking  up,  yet  this  piece  of  floating  junk,  which  sold 
for  $160,000  in  middle  age  ten  years  before  brought  $1,800,000, 
so  hard  pressed  were  the  Allies.  These  prices  arose  from  the 
enormous  profits  of  the  shipping  business.  Dutch  shipping  com- 
panies paid  100  per  cent  dividends;  Danish  shipping  shares  rose 
100  points  in  a  week,  reached  1,000  on  a  par  of  100,  and  made 
profits  in  a  year  that  were  greater  than  the  capital.  It  is  no 
wonder  that  after  America  entered  the  war  the  cry  of  "  ships, 
ships,  and  yet  more  ships"  came  continuously  across  the  sea 
from  the  leaders  in  Europe. 

Increased  Demand  and  Low  Efficiency  of  Shipping 

Many  causes  have  combined  to  produce  this  world  shipping 
famine. 

(a)  First,  of  course,  is  the  inconspicuous  submarine  making 
its  conspicuous  sinkings.  This  and  many  other  causes  have 
helped  to  produce  the  shipping  scarcity.  Among  these  secondary 
causes  may  be  mentioned : 

^  Fair  play.  May  10,  p.  780. 


34  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

(b)  The  absolute  increase  of  need  for  ships.  In  a  short  time 
after  the  war  was  under  way,  Britain  was  using  one-half  her 
huge  fleet  in  the  war  either  in  the  direct  service  of  her 
own  needs,  or  indirectly  by  handing  over  the  vessels  to  her 
allies. 

(c)  Closely  akin  to  these  was  the  necessity  of  longer  haul. 
This  became  inevitable  when  the  Central  Powers  cut  Europe  in 
two.  As  with  the  above  mentioned  case  of  Norway,  which  re- 
quired three  times  as  much  tonnage  after  the  Baltic  was  closed, 
so  the  blocking  of  the  Dardanelles  cut  off  France  and  Italy  from 
the  grain  supply  of  the  Black  Sea.  The  closing  of  this  source 
affected  not  only  the  Mediterranean  combatants,  but  also  Greece, 
Spain,  and  Portugal,  and  even  Britain  herself,  compelling  all  these 
people  to  seek  their  grain  supplies  in  more  distant  places — South 
America,  India,  Australia  and  America. 

(d)  Then  after  reducing  the  shipping  that  was  left  available 
for  increased  work,  the  war  crowded  the  shipyards  with  war 
work,  making  it  impossible  to  get  adequate  overhauling  to  keep 
the  ships  in  order,  and  even  delayed  imperative  repairs  when 
vessels  were  disabled. 

(e)  The  danger  of  attack  by  the  submarine  made  necessary 
long  detours,  thereby  increasing  the  time  at  sea. 

(/)  The  management  of  ships  by  amateur  hands  of  the  war 
machine,  according  to  the  often  bitter  complaints  of  the  British 
shipowners,  still  further  reduced  the  efficiency  of  such  ships  as 
sailed. 

(g)  Very  considerable  reductions  in  active  tonnage  resulted 
from  the  detention  of  enemy  ships  in  neutral  harbors,  and  the 
holding  of  ships  in  port  for  fear  of  destruction  by  submarines. 
At  the  end  of  1917  half  the  Swedish  marine  was  reported  idle 
for  this  cause. 

(/i)  Lastly  and  perhaps  worst  of  all  was  the  port  congestion 
that  promptly  followed  the  revival  of  trade  after  the  outbreak 
of  the  war.  The  attempts  to  increase  the  traffic  at  any  par- 
ticular point  showed  us  how  surprisingly  delicate  was  the  balance 
between  the  trade  of  peace  and  its  facilities,  how  limited  were 


THE    SHIPPING    INDUSTRY    DURING    THE    WAR  35 

storage  facilities,  how  constant  was  the  flow  of  goods,  and  how 
low  the  reserves  ordinarily  kept.  When  the  war  chopped  world 
trade  in  two,  and  made  it  necessary  to  supply  great  armies,  the 
trade  of  some  ports  was  suddenly  doubled  or  tripled.  Paralysis 
and  congestion  inevitably  followed.  For  example,  France  had 
received  much  of  her  import  from  the  Rhine  ports  of  Rotterdam 
and  Antwerp,  which  latter  soon  passed  into  German  hands.  This 
naturally  threw  her  trade  around  to  the  western  ports, ^  and  at 
the  same  time  the  necessities  of  rapidly  increasing  armies  brought 
a  steady  succession  of  ships  with  entirely  unusual  supplies  to  the 
ports  of  the  channel  and  the  Bay  of  Biscay.  For  the  time  that 
the  French  capital  was  at  Bordeaux,  nearly  all  cargoes  for  gov- 
ernment account  went  to  Bordeaux,  which  port  was  in  a  terrible 
tangle.  This  situation  seems  to  have  resulted  wherever  traffic 
was  suddenly  increased. 

From  Alexandria,  Egypt,  came  the  complaint  that  it  took  10 
to  '20  days  to  unload  a  steamer.  Lloyd's  Weekly,  May  28,  1915, 
reported  that  2S  steamers  lay  at  anchor  in  the  roads  at  Marseilles 
waiting  for  a  berth  and  without  definite  information  as  to  when 
they  were  likely  to  get  inside  a  harbor. 

Liverpool  -  had  in  mid- April  70  vessels  waiting  for  discharging 
berths,  and  many  of  the  berths  allotted  to  steamers  were  full  of 
cargoes  discharged  from  previous  vessels,  technically  known  as 
foul  berths,  and  therefore  practically  useless  for  the  purposes  of 
discharge.  Three  weeks  later  the  number  of  waiting  vessels  at 
Liverpool  was  78. 

In  January,  Genoa  had  over  40  coal  and  grain  laden  steamers 
in  the  outer  harbor.^  Yet  Fair  play  in  its  issue  of  October  15 
previously  had  been  commenting  upon  the  decadence  of  the 
shipping  of  Genoa.  By  the  fall  of  1915  it  had  become  so 
crowded  that  for  a  time  the  unloading  of  coal  vessels  was  entirely 


'  M.  de  Monzie  in  the  French  Chamber  of  Deputies  said  that  before  the 
war  France  imported  over  18,000,000  tons  of  freight  by  land.  In  1916  it  had 
dropped  to  1,000,000  while  43,000,000  tons  came  by  sea.  Fair  play,  September 
13,  1917. 

"-  Lloyd's  Weekly.  May  7,  1915. 

"  Pairplay,  January  7,  1915. 


36  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

prohibited/     Perhaps  the  extreme  case  of  congestion  is  covered 
by  this  lament : 

It  is  monstrous  to  be  paying  40  shippings  per  cent  war 
premium  for  three  months  for  the  privilege  of  having  a 
boat  at  a  French  port  for  90  days  as  a  warehouse.  Some 
boats  after  arriving  at  certain  French  ports  have  been 
ordered  to  a  second  and  even  a  third  port  and  in  one  case 
to  a  fourth  port." 

Lloyd's  Weekly  (January  14,  1916)  reports  that  Glasgow  was 
in  a  bad  snarl  because  of  increased  war  traffic,  nearly  all  of  which 
was  rail  borne,  and  port  authorities  were  considering  pooling  all 
railway  facilities  by  all  lines  as  a  matter  of  relief.  The  next 
month,  February  25,  Lloyd's  reported  that  London  was  so  over- 
crowded that  it  was  rare  for  a  vessel  to  get  unloaded  within  two 
weeks,  and  that  it  often  took  longer.  One  of  the  causes  of  this 
port  congestion  was  the  actual  labor  shortage,  because  men  had 
gone  to  the  war,  and  the  constructive  labor  shortage  arising  from 
new  prosperity.  The  high  wages  of  the  stevedores  resulted  in 
a  sense  of  affluence  which  enabled  them  to  enlarge  their  in- 
dulgence in  holidays.^ 

Port  congestion  began  in  France,  England,  and  in  Italy,  but  it 
extended  to  America  also.  For  many  months  New  York  was 
congested  to  a  point  of  inefficiency  rivaling  that  of  European 
ports,  and  helping  to  produce  an  appalling  railway  congestion. 

With  all  these  disturbing  elements  it  is  easy  to  see  why  we 
had  ship  famine,  starvation  rates,  and  shipping  profits  that  were 
beyond  the  shipowners'  fondest  hope. 

Shipbuilding 

What  was  the  world's  response  to  this,  the  greatest  goad  that 
ever  pressed  upon  the  desire  of  gain  in  shipowners  and  ship- 
builders?   The  first  result  was  that  the  shipowner  took  his  profits, 

'  Llovd's  Weeklv,  October  22,  1915,  p.  676. 
'  Fairplay,  October  29,  1914,  p.  676. 

'  Sir  Norman  Hill.  Secretary  Liverpool  Shipowners  Assn.,  quoted  in  Fair- 
play,  January  21,  1915. 


THE    SHIPPING    INDUSTRY    DURING    THE    WAR  37 

all  he  could  get.  Secondly,  he  rushed  off  to  get  more  ships  to 
get  more  profits.  It  is  interesting  to  note  that  the  Norwegian,  a 
neutral  carrier,  and  a  professional  seaman  with  20  per  cent  of  his 
sons  making  their  living  by  shipping,  with  his  look-outs  on  his 
high  promontories,  was  the  first  to  see  the  situation.  He  first 
arrived  at  the  shipyard  gate  with  his  money  bags.  In  Britain 
he  was  turned  away  because  the  first  shipbuilding  response  in 
Britain  was  to  load  up  all  yards  with  war  vessels.  The  Nor- 
wegian, refused  in  England,  placed  contracts  for  hundreds  of 
thousands  of  tons  of  shipping  in  American  yards,  and  later  sold 
most  of  it  to  British  owners  at  a  handsome  profit. 

When  the  war  had  gone  on  for  a  year,  particularly  after  th«; 
battle  of  Jutland,  June,  1916,  England  realized  that  her  problem 
was  not  so  much  the  naval  battle  as  it  was  pressure  for  freight 
ships.  Late  in  1915  she  began  to  divert  her  energies  from  war- 
ships to  freighters.  She  had  early  placed  all  her  shipyards  under 
requisition  to  do  the  government's  bidding,  and  as  the  need  for 
ships  became  ever  more  pressing,  she  multiplied  her  efforts  and 
in  1917  started  in  on  a  campaign  of  government  owned  ship- 
yards, building  three  in  one  district  on  the  Severn,  and  thus  hoped 
by  1918  to  get  her  merchant  ship  launchings  back  to  as  great 
a  figure  as  she  had  ever  had. 

Every  shipyard  in  the  world  possessing  shipbuilding  possibility 
was  the  scene  of  busy  work.  Ocean  commerce,  being  absolutely 
international,  found  all  ships  equally  acceptable,  whether  they 
were  built  in  Zealand  or  New  Zealand,  England,  or  New  England, 
Occident  or  Orient,  all  of  which  places  are  as  a  matter  of  fact 
building  as  fast  as  they  can.  None  built  ships  more  furiously 
than  the  Japanese  while  their  materials  held  out.  Later  Japan 
had  a  very  interesting  negotiation  with  the  United  States,  when 
the  latter  refused  to  supply  steel  for  the  Japanese  shipyards  with- 
out return  of  some  of  the  shipping  built.  The  United  States 
shipyards  booked  themselves  ahead  with  orders  placed  at  phe- 
nomenal prices.  American,  British,  and  Norwegian  owners  en- 
larged their  orders  and  shipbuilders  stretched  their  facilities  on 
all  coasts.     Ten  thousand  ton  steel  steamers  were  built  even  at 


248518 


38  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Hong  Kong/  After  our  entrance  into  the  war  we  added  to  the 
private  efforts  of  American  builders  the  great  plan  of  government 
yards  managed  by  the  United  States  Shipping  Board  and  financed 
by  the  billions  of  congressional  appropriation ;  this,  too,  in  addi- 
tion to  the  hundreds  of  ships  that  the  United  States  Government 
had  contracted  for  in  private  yards.  America  also  followed  Eng- 
land's example  and  requisitioned  all  shipyards  to  do  the  nation's 
bidding.  It  is  only  France  that  has  neglected  shipbuilding,  and 
this  from  necessity.  She  has  borne  the  brunt  of  the  war,  and 
also  lost  her  coal  fields  and  much  of  her  iron  industry.  This 
being  the  case  all  her  metal  industry  has  gone  toward  munitions 
rather  than  to  shipyards.  Some  unfinished  steamers  stood  al- 
most untouched  in  French  yards  from  191-i  until  the  end  of  1917. 
Norway  and  Denmark,  despite  the  heavy  dependence  upon  sea 
borne  trade  and  their  relatively  large  merchant  marines,  have 
been  unable  to  secure  from  either  England  or  the  United  States, 
the  necessary  raw  material  to  run  their  yards  to  anything  like 
full  capacity.  The  Dutch  have  been  peculiarly  ground  between 
the  two  contending  groups  of  combatants.  Submarines  and  home 
necessity  kept  British  and  American  steel  from  going  into  Hol- 
land, and  while  the  Germans  had  steel  they  would  not  part  with 
it  except  under  conditions  that  redounded  to  the  benefit  of 
Germany. 

No  steel  can  be  obtained  from  either  Great  Britain  or 
France,  and  the  Germans  refuse  to  export  unless  they  obtain 
certain  specified  goods  in  return  and  also  unless  the  materials 
exported  are  used  only  as  they  direct.  They  insist  on  Dutch 
shipbuilders  signing  a  contract,  valid  for  five  years  after  the 
war  is  over,  stating  that  they  will  not  sell  any  new  ship 
without  giving  Germany  the  option  of  purchase,  that  they 
will  not  allow  the  ships  they  build  to  be  employed,  directly 
or  indirectly,  for  the  benefit  of  Germany's  present  enemies', 
and  that  no  ship  is  repaired  with  German  iron  or  steel  by 
any  firm  on  the  German  black  list." 

^  "  The  Hong  Kong  yards  are  now  building  ships  in  competition  with  the 
shipyards  of  Europe,  and  are  building  them  as  cheaply  as  the  cheapest." 
The  Economic  World.  February  12,  1916,  p.  200;  also  Wall  Street  Journal. 

^  Glasgow  Herald,  December  29,   1917,  p.  ZZ. 


THE    SHIPPING    INDUSTRY    DURING    THE    WAR  39 

Spain  was  more  fortunately  placed.  She  could  trade.  She 
had  beds  of  precious  hematite  ore  without  which  English  steel 
mills  could  not  meet  the  needs  of  war  industry.  With  the  power 
of  embargo  on  this  ore,  Spain  could  get  what  supplies  she  needed 
for  her  few  shipyards,  which  are  as  busy  as  any  yards. 

Despite  these  worldwide  efforts  at  rebuilding,  it  is  well  known 
that  even  yet  (May,  1918)  the  total  world  output  is  less  than 
submarine  sinkings,  and  the  problem  of  the  tonnage  supply  is 
becoming  ever  more  acute. 

The  results  of  this  ever  increasing  shortage  of  shipping  supply, 
and  the  ever  increasing  scope  of  the  world  war,  have  placed  upon 
the  Entente  countries  as  well  as  upon  neutrals,  most  unimagined 
necessities  for  economic  and  commercial  readjustments  along  the 
line  of  do-without.  The  nations  are  in  a  situation  much  like 
that  of  Jules  Verne's  ship  in  w^hich  his  globe-trotting  hero  crossed 
the  Pacific  on  that  record  journey  around  the  world  in  eighty 
days.  Before  reaching  San  Francisco  the  coal  ran  out,  so  they 
burned  the  furniture,  the  superstructure,  the  upper  deck,  and 
finally  reached  port  with  the  vessel  cut  down  almost  to  the  water's 
edge,  but  still  floating,  still  steaming,  although  she  was  consuming 
herself  as  she  went. 

Faced  by  similar  necessities,  governments  have  seized  upon 
industry  with  the  merciless  grasp  of  the  drowning  man.  Ship- 
ping was  one  of  the  first  to  be  subjected  to  national  need. 

Government  Control  of  Ocean  Freight  Rates 

The  combination  of  all  these  factors — reduced  shipping,  in- 
creased demands  for  freight,  decreased  efficiency  of  existing 
shipping — has  made  possible  the  piratical  rates  which  ship- 
owners have  been  able  to  ask  and  receive.  Britain,  living  as 
she  does  upon  sea  borne  goods,  has  shielded  herself  in  part  from 
these  financial  exactions  by  a  policy  of  government  control  of 
shipping  which  has  been  steadily  increasing  from  the  small  be- 
ginnings of  her  early  requisitions  to  almost  complete  control.  A 
week   after   the   war   started   there    was   a    royal   proclamation 


40     ,       INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

(August  7,  1914)  announcing  the  policy  of  requisitioning  of 
ships.  There  is  of  course  nothing  new  in  this.  In  the  process 
of  registering  under  a  flag,  virtually  all  nations  make  provisions 
whereby,  without  question,  the  ship  goes  into  the  service  of  the 
nation  under  reasonable  terms  of  compensation  at  the  time  of 
national  need.  For  a  time  the  British  Government,  in  the  time 
of  ship  depression  at  the  opening  of  the  war,  went  into  the  open 
market  and  took  ships  as  any  other  charterer.  Then  when  the 
war  settled  down  for  a  long  struggle,  there  was  established  the 
much  controverted  scale  of  rates  spoken  of  in  bitterness  as  the 
Blue  Book  rates — a  complicated  scale  of  prices  depending  on 
character,  equipment,  size,  speed,  etc.,  of  the  vessels.  These 
rates,  made  in  October,  1914,  were  fair  rates  in  the  ship  market 
as  it  then  existed.  They  provided  for  fair  income  on  the  ship 
at  its  value  at  that  time,  or  at  its  previous  value.  But  as  the 
war  went  on  the  rate  of  the  ship  free  to  bargain  rose  week  by 
week  almost  without  limitation,  as  previously  stated.  That  left 
the  British  shipowner  in  the  unhappy  position  of  seeing  the  neu- 
tral ship  or  the  unrequisitioned  British  ship  earning,  first,  double 
the  hire  he  was  receiving  for  his  requisitioned  ship,  then  triple, 
then  quadruple.  Finally  the  static  Blue  Book  rates  became  one- 
sixth  or  one-seventh  of  the  amount  the  British  Government  itself 
was  compelled  to  pay  to  get  a  neutral  ship  to  meet  some  of  its 
needs.  In  order  to  distribute  this  burden  of  mixed  earnings  with 
some  degree  of  fairness,  there  was  established  a  policy  of  taking 
a  certain  proportion  of  the  shipping  of  a  particular  company, 
aiming  to  leave  all  owners  about  the  same  proportion  of  their 
fleets  free  to  reap  the  fat  harvests  of  the  high  seas.  Some 
owners,  however,  complained  that  this  distribution  of  requisition- 
ing was  very  unfairly  handled,  some  people  having  nearly  all 
their  ships  free,  others  having  nearly  all  their  ships  taken. ^  In 
order  to  prevent  undue  competition  of  the  various  Allies  with 
each  other  in  the  ship  market,  and  in  order  the  better  to  utilize 
the  existing  tonnage,  there  was  formed  an  interallied  chartering 

'  Lloyd's  Weekly,  about  January,  1916.     Review  of  shipping  for  the  year 
1915. 


THE    SHIPPING    INDUSTRY    DURING    THE    WAR  41 

board  which  put  under  one  hand  the  task  of  securing  ships  for 
all  the  European  Allies.  The  management  of  ships  was  in  De- 
cember, 1916,  brought  from  various  hands  in  the  War  Depart- 
ment and  the  Admiralty  under  the  hands  of  a  new^  official,  the 
shipping  controller,  Sir  Joseph  Maclay,  an  experienced  ship- 
owner under  whose  administration  the  bitter  complaints  of  ama- 
teur inefficiency  have  declined. 

The  proportion  of  British  ships  under  reciuisition  at  Blue  Book 
rates  by  the  government  has  steadily  increased,  until  by  the 
middle  of  1917  it  became  100  per  cent  of  all  ships  above  500 
tons. 

The  United  States,  Holland,  and  nearly  all  other  countries 
have  been  compelled  similarly  to  control  at  least  that  part  of 
the  national  fleet  that  was  meeting  the  national  needs. 


British  Control  of  Shipping  through  Coal  Supply 

Not  only  have  the  British  taken  100  per  cent  of  their  own 
shipping,  but  by  a  quiet  and  judicious  application  of  the  primal 
force  of  might,  they  have  succeeded  in  getting  considerable 
amounts  of  neutral  shipping  as  well.  The  only  coal  to  be  had 
in  the  maritime  world  of  Europe  and  Africa  is  British.  The 
shores  of  the  Mediterranean  have  no  coal,  save  Spain's,  and  her 
supply  is  only  a  fraction  of  the  home  needs.  France  is  in  a  coal 
famine.  The  German,  Belgian,  and  Russian  supplies  are  shut 
off  by  the  war.  Japan  is  too  far  away  to  play  much  of  a  part. 
The  pressure  to  move  food,  munitions,  and  raw  materials,  almost 
shut  out  American  coal,  which  had  had  a  short  boom  in  the  early 
months  of  the  war;  and  so  Britain,  the  dominant  source  of 
supply,  has  been  virtually  in  a  position  to  dictate  what  ships 
should  get  the  coal  that  she  shipped  with  such  effort.  When  the 
Danish  shipowner  ran  his  vessel  into  a  British  coaling  station  in 
South  Africa,  or  the  Suez  Canal,  or  England  herself,  there  was 
a  fine  opportunity  for  a  bargain.  The  British  hand  was  strong. 
Why  should  she  give  coal  to  the  neutral  with  his  piratic  rates 
when  she  so  sorely  needed  it  for  herself  and  her  allies?     There 


42  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

is  no  good  answer.  Therefore  many  a  foreign  shipowner  got 
coal  only  on  condition  of  taking  a  cargo  to  Britain  or  hiring  a 
proportion  of  his  fleet  to  the  British  Government.  The  case  is 
exactly  analogous  to  the  Japanese  attempt  to  get  American  steel, 
and  the  American  attempt  to  trade  food  for  Dutch  and  Nor- 
wegian shipping. 

National  Value  of  Britain's  Big  Merchant  Marine 

Britain  may  be  said  to  have  been  saved  thus  far  by  her  huge 
and  far  flung  fleet.  Not  only  was  she  carrying  her  own  trade, 
but  also  that  of  many  a  neutral  as  well.  These  ships  have  been 
called  into  service  of  the  mother  country  one  by  one.  For 
example,  an  American  firm  of  exporting  merchants  operated  their 
own  ships  and  ran  a  steamship  line  from  New  York  to  western 
South  America.  While  the  vessels  belonged  to  American  capi- 
talists with  headquarters  in  New  York,  they  were  registered 
under  the  British  flag  because  it  permitted  them  to  be  bought 
more  cheaply  and  run  more  cheaply  than  under  the  American 
flag.^  They  were  technically  owned  by  a  British  corporation 
with  headquarters  in  London — a  subsidiary  of  the  American 
corporation.  For  many  years  they  effectively  served  trade  be- 
tween the  United  States  and  western  South  America,  but  Britain 
found  need  to  use  all  British  ships,  and  these  were  British  ships, 
and  so  one  by  one,  on  due  notice,  the  vessels  were  called  in  be- 
tween July,  1916,  and  July,  1917. 

*  From  the  standpoint  of  profits,  the  American  owners  had  staked  their 
money  on  the  wrong  horse.  They  would  have  been  millions  of  dollars  richer 
had  they  elected  Norwegian  registry  rather  than  British,  because  it  happened 
to  remain  neutral,  and  they  would  not  have  been  compelled  to  go  into  the 
open  market  and  bid  for  such  shipping  as  was  available  at  the  almost  pro- 
hibitive rates  then  existing.  They  were  unable  to  secure  anything  but  slow 
tramp  steamers  unsatisfactory  for  the  purpose,  but  the  best  to  be  had.  The 
International  Mercantile  Marine  is  another  company  partly  American  with 
vessels  under  the  British  flag,  which  has  lost  enormous  possible  earnings 
during  the  period  of  our  neutrality  when  vessels  of  America  or  other  neutral 
registry  were  able  to  reap  the  full  profits  of  the  high  sea  rates  while  the 
British  vessels  such  as  those  of  the  International  Mercantile  Marine  were 
controlled  by  the  British  Government.  There  was  enough  of  profit,  however, 
left  to  the  British  liner  to  enable  the  International  Mercantile  Marine  to 
make  good  its  watered  stock,  of  which  it  had  small  hope  in  an  era  of  peace 
and  competition. 


the  shippixg  industry  during  the  war  4^3 

The  Disturbance  and  Limitation  of  International  Trade 

Remote  indeed  is  the  habitation  of  the  human  being  whose 
daily  life  has  not  been  at  some  point  pinched  by  the  trade  embar- 
rassments that  have  resulted  partly  from  the  limitations  of  pro- 
duction due  to  the  war,  but  more  because  of  the  ship  shortage. 
In  a  short  time  after  the  war  started,  the  cessation  of  exports 
from  Argentina  had  so  disturbed  employment  in  Buenos  Aires 
that  people  stood  in  bread  lines  waiting  for  the  doles  of  charity. 
The  cessation  of  the  purchase  of  cotton  made  for  a  season  a 
low  price  and  great  depression  in  the  southern  United  States. 
As  the  war  went  on,  goods  for  export  piled  up  upon  the  piers 
in  almost  every  land,  especially  in  distant  continents  to  which 
it  became  ever  more  difficult  to  send  the  ships.  Thus  we  now 
hear  of  nearly  a  million  tons  of  sugar  waiting  in  Java,  and  from 
two  to  three  hundred  million  bushels  of  wheat  in  far  away 
Australia  hopelessly  beyond  the  reach  of  hungry  Europe.  In 
the  spring  of  1916  even  so  valuable  a  commodity  as  wool  waited 
in  the  New  Zealand  warehouses,  to  the  embarrassment  of  farmer 
and  trader,  because  ships  were  not  available  to  carry  even  this 
commodity,  worth  hundreds  of  dollars  per  ton. 

The  trade  situation  offered  two  dangers  to  the  Allied  peoples, 
and  these  made  two  strong  reasons  for  rigid  control  of  trade  by 
government.  The  first  of  these  dangers  was  that  of  strengthen- 
ing the  enemy  by  indirect  trade.  This  flourished  at  a  lively  rate 
for  many  months  through  neutral  countries,  especially  Holland 
and  Scandinavia.  It  was  because  of  this  that  the  British  policy 
of  licensing  particular  shipments  before  they  could  be  permitted 
to  go  overseas  was  begun.  The  licensing  began  with  coal  and 
food,  but  its  scope  gradually  widened  under  the  two  pressures — 
fear  of  supplying  the  enem3^  and  home  needs.  With  the  decline 
of  shipping  and  the  impossibility  of  meeting  all  the  demands  of 
trade  it  became  necessary  for  the  government  to  say  which  ship- 
ment was  necessary  and  must  have  precedence  over  others  which 
could  wait.  Closely  akin  to  this  was  the  similar  control  of 
industry,  d.  control  that  involved  again  the  application  of  the 


44  INFLUENCE    OF   THE    GREAT    WAR    UPON    SHIPPING 

concept  of  greater  relative  necessity  and  therefore  of  priority  of 
supply  or  opportunity.  Should  this  man  be  permitted  to  build 
a  new  automobile  factory?  The  answer  must  be  given  in  terms 
of  the  relation  of  the  need  to  war.  If  war  needs  automobiles, 
thev  may  be  made'.  If  it  does  not  need  them,  they  can  not  be 
made.  Such  is  the  British  answer.  This  worked  around  rather 
rapidly  to  the  point  where  Britain  was  controlling  not  only  im- 
ports and  exports,  but  the  establishment  of  new  enterprises,  and 
the  enlargement  of  old  enterprises. 

Next  came  the  prevention  of  undue  profiteering  in  industry  as 
it  had  been  checked  in  shipping,  until  Britain  worked  around  to 
the  point  where  the  government  is  a  large  price  controller  and 
virtually  the  only  importer.  All  ships  are  being  operated  as  the 
government  orders,  to  carry  the  goods  that  government  orders,  at 
rates  the  government  orders. 


Industrial  Readjustments 

Numerous  readjustments  have  been  made  with  the  object  of 
increasing  the  directness  by  which  national  energy  shall  focus 
on  the  war,  and  especially  on  shipbuilding.  The  war  has 
become  a  struggle  in  which  every  man,  woman,  and  child  par- 
ticipates in  some  degree — a  struggle  in  which  every  hour  of 
work,  every  piece  of  material  has  a  bearing.  Shipping  becomes 
a  part  of  all  transportation,  so  all  transportation  must  be  con- 
trolled and  systematized  in  the  interests  of  efficiency.  Ship- 
building becomes  a  part  of  all  manufacturing.  It  too  must  be 
controlled  along  with  all  its  materials. 

To  simplify  the  railroad's  work,  Britain  has  been  districted 
so  that  certain  coal  mines  shall  supply  the  markets  nearest  them. 
The  Ministry  of  Munitions  has  taken  absolute  control  of  the 
iron  industries  and  distributes  this  material  to  meet  the  most 
pressing  needs  of  the  nation,  namely,  ships  and  munitions.  In 
the  interests  of  increasing  shipyard  efficiency,  the  Admiralty 
early  established  committees  in  each  shipbuilding  region  to 
expedite   building   in   every   possible   way.      These   committees 


THE    SHIPPING    INDUSTRY    DURING    THE    WAR  45 

consist  of  engineers,  builders,  material  men,  and  others  con- 
versant with  the  various  needs  of  the  trade.  The  army  was 
combed  out  to  bring  back  to  industry  men  particularly  needed 
at  strategic  points  in  shipyards  and  machine  shops.  In  May, 
1917,  the  shipbuilding  and  supply  work  of  the  Admiralty  and 
War  Office  and  Ministry  of  Shipping  was  coordinated  by  being 
placed  under  the  single  hand  of  Sir  Eric  Geddes.^ 

In  the  attempts  to  increase  the  labor  supply  women  by  the 
thousands  have  taken  up  shipbuilding  work  and  are  doing  a 
surprising  variety  of  operations  which  before  had  been  con- 
sidered as  the  exclusive  tasks  of  men. 

America  Follows  British  Example  in  War  Organization 

America  has  felt  the  same  pressure  that  has  squeezed  Europe, 
but  we  have  felt  it  much  less  because  we  have  done  less  in  the 
war,  and  because  we  are  less  dependent  on  trade,  owing  to  our 
huge  natural  resources,  our  extensive  manufactures,  and  the 
completeness  of  our  manufacturing  and  agricultural  industries. 
In  spite  of  all  these  riches,  we  felt,  even  as  neutrals,  the  ever 
increasing  pressure  of  high  freights,  high  prices,  and  occasional 
shortages,  which  were  acute  only  in  the  two  important  com- 
modities of  potash  and  dyestuffs.  Upon  our  entrance  into  the 
war,  however,  our  conditions  more  nearly  resembled  those  of 
the  European  countries,  and  we  have  promptly  copied  many  of 
their  devices. 

We  began  with  the  export  licensing,  by  which  we  attempted 
to  control  the  shipment  of  goods  to  Germany  through  the  neu- 
tral countries,  especially  Holland  and  Scandinavia.  This  policy 
took  the  form  of  almost  complete  prohibition  of  export  to  these 
regions.  A  spectacular  episode  was  sixty  Dutch  steamships  lying 
loaded  in  New  York  harbor  for  months  between  August,  1917, 
and  midwinter,  1918.  There  they  lay  despite  the  fact  that  each 
one  of  them  was  worth  thousands  of  dollars  a  day  upon  the 
high  seas,  to  which  they  finally  went  as  a  result  of  extended 
negotiations;  but  they  went  under  charter  to  the  United  States 

'  Lloyd's  Weekly,  May  18,  1917. 


46  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Government  to  serve  our  coasting  trade  and  our  South  Ameri- 
can trade.     Their  cargoes  were  eaten  in  America. 

The  Norwegians  had  the  distinguished  Dr.  Nansen  here  for 
months  in  the  attempt  to  get  food,  but  we  wanted  something  in 
return.  Nansen  claimed  that  the  American  Government's  con- 
ditions, Norwegian  shipping  in  return  for  food,  were  too 
onerous,  so  we  had  practical  prohibition  of  trade  with  Norway 
for  a  considerable  period  of  time,  after  which  they  got  hungry 
(see  Chapter  IV)  and  a  bargain  was  reached. 

The  American  Government  also  copied  the  policy  of  Great 
Britain  by  requisitioning  all  American  ships  (October,  1917) 
above  2,500  tons  dead-weight  carrying  capacity.  In  this  respect 
we  also  followed  the  English  example,  particularly  in  the  case  of 
line  vessels,  by  immediately  handing  the  vessels  back  to  the  old 
owners  to  operate,  but  on  government  account,  thus  giving  the 
government  complete  control  over  where  they  went,  what  they 
carried,  and  the  part  they  would  play  in  war  and  in  meeting 
national  needs. 

American  railway  congestion,  and  port  congestion,  resulting 
shortage  of  supplies  of  coal  and  many  other  commodities,  have 
brought  home  to  America  some  realization  of  the  fact  that  the 
numerous  independent  enterprises  that  have  resulted  from  our 
individualistic  system  of  industry  and  trade  are  really  inefficient 
and  wasteful,  as  an  examination  of  industry  in  war  countries 
clearly  shows.  The  whole  of  the  world  commerce  has  been  a 
great  crisscross  much  like  what  the  trade  in  California  oranges 
used  to  be  during  the  period  of  individualistic  independence. 
At  that  time  a  city  like  Chicago  might  receive  fifteen  cars  all 
in  one  morning,  and  Milwaukee  none;  Vv'hereas  the  next  day 
Milwaukee  might  receive  ten  cars  and  Chicago  three,  resulting 
in  starving  and  glutting  of  markets  and  extra  moving  of  cars 
to  places  where  they  were  desired.  All  this  waste  of  oranges 
and  waste  movement  of  oranges  has  been  eliminated  by  putting 
their  marketing  in  the  hands  of  one  association  which  surveys 
the  field  and  sends  the  oranges  direct  to  the  places  that  want 
them. 


THE    SHIPPING    INDUSTRY    DURING    THE    WAR  47 

A  similar  simplification  of  national  and  international  trade, 
first  worked  out  to  some  degree  in  Germany,  is  a  necessity 
which  the  war  has  been  step  by  step  forcing  upon  the  Allied 
nations.  Many  interesting  readjustments  have  already  occurred 
in  the  United  States.  An  illuminating  example  is  furnished  by 
the  Tide-Water  Coal  Exchange  operating  in  the  coal  exporting 
ports  of  New  York,  Philadelphia,  Baltimore,  Norfolk,  and  Cleve- 
land. They  claim  to  have  reduced  the  average  lie-over  of  loaded 
coal  cars  in  Philadelphia  from  about  eight  days  to  about  three 
days,  by  the  elimination  of  individual- enterprises  through  co- 
ordination that  results  in  the  simple  practice  of  pooling.  It 
appears  that  it  has  been  the  practice  in  Philadelphia,  for 
example,  for  company  A  to  load  a  1,500  ton  barge  of  coal  of 
a  certain  grade  for  shipment  to  New  England.  This  1,500 
tons  requires  30  cars  of  50  tons  each.  The  company  would 
have  four  or  five  cars  of  a  certain  kind  of  coal  arriving  today, 
a  few  tomorrow,  a  few  the  next  day,  until  finally  it  would  have 
30  cars  in  port  and  would  then  proceed  to  load  the  barge.  Mean- 
while company  B  was  doing  exactly  the  same  thing,  as  were 
company  C,  company  D,  and  company  E.  The  coal  exchange 
pools  all  this  business.  If  company  A  has  a  barge  of  a  certain 
kind  of  coal  to  ship,  and  all  five  companies  together  have  enough 
cars  of  that  grade  of  coal  in  port,  it  is  dumped  into  that  barge 
and  the  cars  sent  back  to  the  mines.  The  next  day  company 
B's  barge  is  loaded  and  the  next  day  company  C's.  In  each  case 
every  company  gets  exact  credit  for  all  the  cars  it  ships,  but  the 
lie-over  has  been  reduced  by  many  days  and  the  coal  cars,  yard 
space,  and  pier  space  are  cleared  for  work  instead  of  being  used 
for  congestive  storage.  This  is  a  small  but  admirable  illustration 
of  what  M.  Augagneur,  Ex-Minister  of  French  Marine,  said  in 
discussing  port  congestion  and  marine  transportation : 

Arrange  for  the  close  coordination  of  land  and  sea  transport, 
give  the  Ministry  of  Alarine  entire  control  of  the  ports,  for 
it  knows  all  their  needs  better  than  the  Ministry  of  Public 
Works,  and,  finally,  arrange  your  arrivals  in  such  a  manner 
as  not  to  leave  a  port  empty  for  15  days  and  then  have  three 


48  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

boats  arriving  each  day.  Then  you  will  see  that  freight 
rates  will  go  down.  If  vessels  are  to  discharge  rapidly 
laborers  are  necessary.  It  is,  therefore,  indispensable  to  re- 
lease the  dockers  who  have  been  mobilized.^ 

In  the  application  of  this  process  we  have  found  it  desirable  in 
this  country  to  establish  war  port  boards  that  can  look  over  the 
whole  port  rather  than  let  each  company  work  in  its  own  inde- 
pendent way,  and  late  in  January,  1918,  the  congestion  of  the 
port  of  New  York  had  become  so  bad,  due  to  the  inability  to 
transfer  goods  from  cars  to  warehouse,  and  from  warehouse 
to  ship  that  a  committee  of  experts  composed  of  two  American 
shipping  men  and  one  representative  of  the  British  Admiralty 
was  appointed  to  the  work  of  coordinating  the  various  Atlantic 
ports.  They  order  ships  to  the  places  where  they  can  be  loaded 
most  expeditiously  because  they  find  it  saves  time  to  send  a 
vessel  on  to  Philadelphia,  Baltimore,  or  Norfolk,  rather  than  let 
her  lie  for  days  at  New  York  waiting  for  a  chance  for  her  cargo 
to  be  dug  out  of  a  hopeless  mass  of  cars  on  the  hundreds  of  miles 
of  tracks  surrounding  that  terminal. 

This  is  very  similar  to  the  action  of  the  Lake  Carriers  Asso- 
ciation, November,  1917,  who  voted  to  mobilize  the  lake  fleets 
and  put  them  all  in  charge  of  one  committee  with  power  to  order 
their  movements,  making  the  greatest  possible  expedition  and 
least  waste  of  time. 

It  is  unfortunate  that  the  world's  shipping  situation  could  not 
have  received  early  the  benefit  of  a  more  thorough  organization 
of  American  and  Allied  resources  moving  toward  the  elimination 
of  useless  motion,  the  reduction  of  eflfort  on  non-essential  indus- 
tries, and  the  focusing  of  national  energy  on  the  vital  point  of 
shipping.  The  steps  that  have  been  taken  toward  this  end  will 
be  explained  in  some  detail  in  ensuing  chapters. 


*  Lloyd's  Weekly,  January  7,  1916,  p.  14. 


CHAPTER  III 
The  Effects  of  the  War  on  Marine  Insurance 

Dependence  of  Trade  on  Marine  Insurance 

During  the  first  week  of  August,  1914,  vessels  of  all  nations, 
neutrals  as  well  as  belligerents,  were  held  in  port  as  effectively 
as  if  the  fleet  of  Great  Britain  or  all  the  submarines  of  Germany 
were  lying  in  wait  just  outside  the  harbor  limits. 

What  had  caused  this  virtual  blockade?  An  answer  is  to  be 
found  in  the  failure  of  marine  insurance  facilities  to  meet  the 
emergency.  The  vessels  could  not  be  insured.  German  raiders 
were  operating  in  all  seas  appearing  where  least  expected.  The 
British  fleet  was  making  every  effort  to  cut  off  the  trade  of  the 
Central  Powers.  But  these  increased  risks  were  not  sufficiently 
great  to  prevent  vessels  from  venturing  from  port  providing 
adequate  insurance  on  hull  and  cargo  could  be  secured.  But 
such  protection  was  not  available.  The  very  foundations  of  the 
marine  insurance  business  had  been  swept  away.  Underwriters 
faced  conditions  that  were  strange  to  them.  What  was  the  risk 
to  be  met?  How  was  the  amount  of  the  premium  to  be  deter- 
mined? Where  was  the  necessary  capital  to  meet  the  increased 
demands  for  insurance  to  be  secured  ?  For  many  days  there  was 
no  marine  insurance  market.  Vessels  could  only  be  insured  at 
excessive  premiums  which  shippers  and  shipowners  refused  to 
pay.    The  cessation  of  commerce  resulted. 

The  United  States,  though  not  engaged  in  the  European  War, 
suffered  greatly  from  a  congestion  of  commodities  produced  in 
large  part  for  the  export  trade.  In  the  southern  States  an  im- 
mense crop  of  cotton  had  been  raised  for  the  English  and  Ger- 
man mills.  With  the  cutting  off  of  all  marine  insurance  facilities, 
the  planters  were  without  a  market.     No  cotton  was  exported; 

49 


50  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

prices  fell;  the  cotter,  producers  faced  ruin.  To  save  the  situa- 
tion appeals  were  finally  sent  to  Congress. 

In  most  of  the  countries  of  Europe,  the  financial  markets  were 
closed  with  the  declaration  of  war  on  Serbia  by  Austria.  There 
was  a  rush  on  the  part  of  the  panic-stricken  holders  of  securities 
abroad  to  convert  their  holdings  into  gold  in  the  open  American 
markets.  There  was  the  possibility  of  the  United  States  being 
drained  of  its  supply  of  gold.  But  comparatively  little  gold  left 
the  country.  Insurance  could  not  be  secured,  or  could  be  secured 
only  at  such  high  rates  that  it  was  impossible  to  make  shipments. 
On  July  29,  1914,  the  marine  insurance  underwriters  of  New 
York  met  and  advanced  their  rates  for  war  risk  insurance  on 
gold  from  $1,250  to  $5,000  for  every  $1,000,000  of  gold  in- 
sured.^ 

On  the  one  hand  the  lack  of  marine  insurance  seriously  injured 
the  commerce  of  the  United  States,  and  on  the  other  it  perhaps 
prevented  a  financial  panic.  Both  cases,  however,  show  how 
dependent  the  trade  of  the  country  is  upon  marine  insurance. 

Development  of  Marine  Insurance  in  England 

Marine  insurance,  this  all  powerful  aid  of  commerce,  is,  as 
the  English  put  it,  an  ancient  and  honorable  institution.  It  has 
existed  since  the  very  beginning  of  trade  by  water  routes.  In 
England,  the  marine  insurance  business  was  carried  on  orig- 
inally by  men  called  underwriters.  The  capital  of  each  under- 
writer was  small,  and  the  amount  of  his  business  limited. 
Several  underwriters  subscribed  to  cover  the  risk  on  a  single 
vessel.  During  the  seventeenth  century  sea  captains  and  traders 
met  at  the  coffee  house  of  Lloyd's  in  London  and  to  them  came 
the  underwriters  for  the  purpose  of  underwriting  the  risks  upon 
voyages  about  to  be  begun.  Thus  was  founded  the  great  as- 
sociation of  Lloyd's,  England's  insurance  center.  Later  it  lost 
its  identity  as  a  coffee  house  and  became  purely  an  insurance 
exchange.     It  should  be  understood  that  Lloyd's  is  not  an  in- 

'  New  York  Journal  of  Commerce,  July  30,  1914. 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE  51 

surance  company,  byt  a  place  where  writers  of  all  kinds  of 
insurance  meet.  They  are  governed  by  rules  drawn  up  for  the 
protection  of  the  insuring  public.  The  growth  of  the  large  com- 
panies or  corporations  has  been  the  latest  development  of  the 
marine  insurance  business  in  England.  At  the  present  time 
most  of  the  English  marine  insurance  is  carried,  not  by  the 
underwriters  meeting  at  Lloyd's,  but  by  the  large  companies 
such  as  the  British  and  Foreign,  the  Indemnity,  or  the  Union. 

Development  of  Marine  Insurance  in  the  United  States 

The  merchants  of  the  United  States  have  had  to  depend  upon 
foreign  companies  for  marine  insurance,  just  as  they  have  had 
to  depend  upon  foreign  vessels  to  carry  their  cargoes.  The  small 
amount  of  marine  insurance  written  by  home  companies  in  the 
United  States  prior  to  the  war  was  carried  in  much  the  same 
way  as  in  England.  There  were  the  large  companies  and  also 
the  private  underwriters,  each  subscribing  to  only  a  part  of  the 
risk  on  a  vessel.  Many  of  the  fire  insurance  companies  were 
permitted  by  their  charters  to  engage  in  the  marine  insurance 
business,  but  few  have  availed  themselves  of  the  privilege.  Be- 
fore the  war,  American  marine  insurance  was  on  an  equality 
with  the  American  merchant  marine. 

Relation  of  War  Risk  to  Ordinary  Marine  Insurance 

To  understand  the  influence  of  the  war  upon  marine  insurance 
we  must  draw  a  distinction  between  ordinary  marine  insurance 
and  war  risk  insurance.  Ordinary  marine  insurance  insures  the 
vessel  and  the  cargo  only  against  the  perils  of  the  sea,  fire,  storm, 
rocks,  etc.  Marine  war  risk  insures  against  sinking  by  mines,  sub- 
marines, raiders,  and  sometimes  against  capture  or  against  deten- 
tion in  a  belligerent  or  neutral  port.  It  is  the  universal  practice 
for  ordinary  marine  insurance  policies  to  contain  clauses  ex- 
pressly excluding  war  risks.  A  separate  policy  must  be  taken 
cut  for  such  risks. 


52  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

The  war  has  had  comparatively  little  effect  upon  insurance 
from  the  perils  of  the  sea.  It  is  true  that  there  has  been  some 
rise  in  the  premiums  charged,  but  the  rise  has  been  slight.  The 
war  has  made  navigation  more  dangerous  through  the  changing 
of  routes  and  the  suppression  of  shore  lights.  Ships  are  being 
used  long  past  the  time  when  they  should  be  placed  in  the  dry 
dock  for  repairs  because  of  the  demand  for  shipping,  the  high 
freight  rates,  and  the  use  of  the  docks  for  naval  vessels  or  new 
shipping.  Also  many  ships  are  being  used  in  transoceanic  trade 
which  were  built  primarily  for  coastwise  or  even  lake  voyages. 
That  the  sea  is  claiming  more  than  its  usual  toll  is  shown  by 
the  increasing  number  of  vessels  posted  as  missing  at  Lloyd's. 
When  we  speak,  therefore,  in  the  following  paragraphs,  of  the 
effects  of  the  war  on  marine  insurance,  we  refer  to  the  effects 
of  the  war  on  war  risk  insurance,  a  form  of  insurance  of  practi- 
cally no  importance  in  times  of  peace,  but  handled  during  pre- 
vious wars  by  the  same  agencies  as  the  ordinary  marine  insur- 
ance. 

Prohibitive  Rates  at  the  Beginning  of  the  War 

Now  let  us  examine  more  closely  the  direct  effect  of  the  war 
upon  marine  insurance  rates.  The  New  York  Journal  of  Com- 
merce for  July  31,  1914,  reported  that  war  risk  insurance  had 
reached  almost  panic  rates  in  London  the  day  before.  In  the 
week  following  August  1,  1914,  war  risk  insurance  rates  became 
almost  prohibitive.  For  voyages  from  England  to  the  United 
States  the  rates  advanced  from  5  shillings  per  hundred  on  July 
28  to  10  guineas  per  hundred  (10.5  per  cent)  on  August  4, 
and  20  guineas  per  hundred  on  August  6,  an  increase  from  -J^ 
of  1  per  cent  to  21  per  cent  in  a  little  over  one  week,  25  to  30 
per  cent  was  charged  to  cover  voyages  through  the  North  Sea. 
South  American  rates  advanced  to  10  per  cenL  and  rates  to 
India  and  the  Far  East  were  as  high  as  15  to  20  per  cent.^  The 
marine  insurance  rates  rose  at  Philadelphia  from  a  normal  of 

'  Market  World  and  Chronicle,  September  5,  1914,  p.  302. 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE         5J 

1  per  cent  to  10  per  cent  and  even  at  the  high  rate  the  great 
majority  of  companies  refused  to  transact  business/ 

Causes   for   High   Rates 

Difficulty  of  Estimating  Risk 

The  primary  cause  for  such  prohibitive  rates  was  the  un- 
certainty of  the  risk.  The  underwriters  possessed  no  informa- 
tion or  experience  from  which  to  determine  the  amount  of  the 
premiums  that  should  be  charged.  They  knew  that  vessels  were 
being  sunk  and  they  knew  that  more  would  be  sunk  in  the  future, 
but  they  had  no  way  of  determining  what  percentage  of  the  voy- 
ages begun  would  be  safely  completed.  Insurance  could  no 
longer  be  governed  by  the  laws  of  probability.  The  business 
became  a  gamble.  As  Lloyd's  had  shut  down  in  London  tem- 
porarily, no  guidance  was  forthcoming  from  that  quarter  and 
the  leading  houses  in  New  York  concluded  to  refuse  to  take 
any  more  risks. ^  This  situation  ended  after  a  few  days  when 
some  business  was  accepted  at  very  high  rates. 

The  German  Commerce  Raiders 

In  addition  to  the  difficulty  of  determining  rates  the  activities 
of  the  belligerent  naval  forces  also  tended  to  bring  about  a  sharp 
advance.  It  will  be  remembered  that  during  the  early  days  of 
the  war,  German  sea  raiders,  such  as  the  Emden,  the  Karlsruhe, 
and  the  Koenigsberg,  worked  havoc  in  the  commercial  routes. 
Their  successes  were  very  directly  reflected  by  the  insurance 
market.  During  September,  1914,  the  number  of  ships  sunk  by 
the  Emden  in  the  Bay  of  Bengal  gave  the  war  risk  market  a 
severe  shock.  As  high  as  40  guineas  per  hundred  (about  42  per 
cent)  was  paid  on  boats  to  that  section.  At  the  same  time 
two  raiders  were  known  to  be  in  the  South  Atlantic  and  50 
guineas  was  paid  for  at  least  one  boat  from  South  America  to 

^  New  York  Journal  of  Commerce,  August  1,  1914. 


54  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

New  York.^  During  the  same  period  there  was  a  dechning 
tendency  in  the  rates  on  routes  known  to  be  free  of  raiders.  In 
November  occurred  another  rapid  rise  on  certain  voyages  due 
to  the  increased  activity  of  the  Emden  and  the  Karlsruhe  in  the 
Indian  Ocean.  A  week  later  the  insurance  market  became  easier 
with  the  report  that  the  Emden  had  been  put  out  of  action  at  the 
Cocos  Islands  and  that  the  Koenigshcrg  was  unable  to  do  any 
further  harm  as  she  had  been  cut  off  in  the  Rufiji  Delta.  A  de- 
cline in  rates  followed. 

Again  in  January,  1917,  the  German  raiders  were  active  in 
the  South  Atlantic.  Within  a  few  days  fourteen  vessels  were 
reported  sunk  or  captured.  The  quoted  rates  to  the  east  coast 
of  South  America,  which  had  been  from  3  to  4  per  cent  for  bellig- 
erents on  January  10,  rose  to  6  to  10  per  cent  on  January  18." 
A  week  later,  January  26,  there  was  a  drop  to  5  to  8  per  cent. 

The  German  Submarines 

The  success  of  the  German  submarine  has  also  been  a  cause 
for  rise  in  rates.  During  the  earlier  days  of  the  war  it  was  a 
new  and  untried  weapon,  but  reports  of  torpedoed  vessels  were 
constantly  coming  in.  There  seemed  to  be  no  method  of  com- 
bating the  menace.  Again  underwriters  were  unable  to  de- 
termine just  what  the  efifect  would  be  on  shipping  and  were 
unable  to  fix  an  equitable  rate.  By  the  last  months  of  1916, 
the  submarines'  success  as  a  commerce  destroyer,  seemed  to  be 
established  and  much  higher  rates  prevailed  on  voyages  through 
the  submarine  zones  than  to  other  sections.  There  was  also 
a  growing  certainty  in  the  minds  of  underwriters  and  shipping 
men  that  Germany  was  about  to  renounce  her  pledges  to  the 
United  States  and  resort  to  ruthless  and  indiscriminate  destruc- 
tion of  all  vessels,  neutral  and  belligerent.  Rates  again  advanced. 
Early  in  December  premiums  from  American  ports  to  Great 
Britain  increased  from  I3/2  per  cent  and  2  per  cent  to  3  per  cent.^ 

'  Fairplay,  September  24,  1914,  p.  509. 

'  New   York  Journal  of  Commerce,  January   18,   1917. 

'  The  Economic  World,  December  2,  1916,  p.  734. 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE         55 

In  February  shippers  had  the  greatest  difficulty  in  obtaining  in- 
surance. For  a  time  there  threatened  to  be  as  complete  a  block- 
ade of  commerce  as  had  existed  in  the  fall  of  1914.  Under- 
writers refused  to  consider  any  rates  less  than  8  per  cent  for 
voyages  to  British  and  French  Atlantic  ports.  Rates  to  the 
Mediterranean  were  from  2  to  5  per  cent  higher  still. ^ 

In  May  of  1917,  with  the  marked  decrease  in  the  reported 
submarine  successes,  the  war  risk  insurance  market  became  much 
freer.  Underwriters  had  not  become  sufficiently  confident  of  the 
supremacy  of  the  Allied  destroyers  to  quote  new  rates,  but  where 
the  quotations  showed  a  spread  of  2  to  5  per  cent,  risks  were 
usually  accepted  at  the  minimum  rate  or  at  a  rate  considerably 
below  the  maximum  quoted.  The  British  Admiralty's  policy  of 
secrecy  in  reporting  the  successes  of  the  submarines  probably 
prevented  a  more  substantial  decline  in  insurance  rates  at  the 
time." 

It  is  impossible  to  secure  complete  quotations  of  rates,  but 
the  rates  offered  in  September,  1917,  will  serve  to  show  the 
effect  of  the  submarine  on  marine  insurance.  During  the  month 
there  was  a  marked  falling  off  in  the  number  of  large  British 
vessels  sunk.  For  the  voyage  from  New  York  to  Liverpool  the 
rate  for  passenger  steamers  was  6  per  cent,  cargo  steamers  8 
per  cent,  and  neutrals  10  per  cent;  New  York  to  the  Mediter- 
ranean, special  steamers,  8  per  cent,  neutrals,  15  per  cent;  New 
York  to  South  Africa,  3  per  cent.  The  further  decline  of  the 
success  of  the  submarine  in  December  brought  a  drop  in  the 
rate  on  belligerent  cargo  steamers  to  the  United  Kingdom  of 
3  per  cent. 

The  British  Blockade 

But  the  chaos  of  the  marine  insurance  lousiness  can  not  be 
attributed  to  Germany  alone.  The  British  blockade  was  also  a 
disturbing  factor.    Early  in  the  war,  it  became  apparent  that  Eng- 


'  The  Economic  World,  February  17,  1917,  p.  242. 
"-Ibid.,  May  19,  1917,  p.  710. 


56  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

i 

land  and  the  Allies  were  determined  to  make  the  war  econom- 
ical and  financial,  and  that  a  systematic  effort  was  to  be  made 
to  cut  off  completely  the  commerce  of  the  Central  Powers.  Un- 
derwriters accordingly  realized  the  danger  of  covering  risks  on 
vessels  to  any  but  the  ports  of  the  Allies. 

On  voyages  to  ports  of  the  Central  Powers  it  was  practically 
impossible  to  secure  war  risk  insurance.  Insurance  on  cargo 
might  be  found,  although  the  rate  was  very  high,  but  only  80 
per  cent  of  the  value  of  the  hull  could  be  protected.  No  in- 
surance was  available  against  capture  by  the  Allied  Powers  or 
against  detention  in  a  belligerent  port,  for  the  English  insurance 
companies  were  ordered  by  the  government  to  stop  insuring 
vessels  against  capture  or  detention  by  the  British  Government 
or  her  allies.^  Despite  the  fact  that  cotton  could  be  sold  in  Ger- 
many at  a  price  three  times  the  price  on  the  Southern  markets, 
little  was  shipped  because  of  the  absence  of  adequate  insurance. 

The   Uncertainty   Regarding   Contraband 

It  was  also  early  recognized  that  the  lists  of  contraband  or 
conditional  contraband  articles  were  not  dependable.  A  cargo 
at  the  time  of  departure  from  port  might  be  on  the  list  of  per- 
mitted articles,  but  before  it  reached  the  war  zone  it  might 
be  transferred  to  the  list  of  contraband.  Over  night  articles 
were  changed  from  one  list  to  the  other.  There  was  also  the 
danger  that  some  part  of  the  cargo  would  be  found  to  be  the 
property  of  the  enemy  or  consigned  to  a  citizen  of  an  enemy 
country.  These  two  factors  tended  either  to  make  insurance 
rates  on  vessels  to  neutral  or  German  ports  exorbitant  or  to 
make  such  insurance  entirelv  unobtainable. 


The  Fluctuation  of  Insurance  Rates 

Not  only  did  the  prohibitive  rates  halt  commerce,  but  the  rate 
fluctuations  had  the  same  effect.     At  this  time  it  is  impossible 

^Market  World  and  Chronicle,  October  24,  1914,  p.  523. 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE         57 

to  present  a  chart  showing  the  changes  in  war  risk  quotations 
from  week  to  week  beginning  with  July,  1914.  Such  a  chart 
would  furnish  information  of  considerable  value  to  the  enemy 
in  determining  the  success  of  the  submarine.  Even  if  the  weekly 
quotations  could  be  obtained  they  would  not  serve  as  an  accurate 
index  to  the  market.  There  has  been  no  standard  rate,  and 
usually  the  rates  offered  on  any  particular  voyage  have  shown 
considerable  spread.  For  example,  a  quotation  of  5  per  cent 
was  given  by  one  underwriter  on  a  certain  voyage;  on  the  very 
same  day  and  on  the  same  voyage  another  underwriter  quoted 
a  rate  of  10  per  cent.  The  rate  also  varies  with  the  commodity 
and  with  the  character  and  the  speed  of  the  vessel.  Even  if 
obtainable,  therefore,  a  chart  of  rate  quotations  would  not  be 
scientific  and  would  not  show  accurately  the  fluctuations  of 
rates. 

From  the  few  quotations  available,  we  can  state  without  fear 
of  contradiction  that  rates  have  fluctuated  tremendously  dur- 
ing the  last  three  years  artd  a  half.  The  following  quotations 
are  for  voyages  from  the  United  States  to  Great  Britain  and  are 
on  belligerent  merchant  ships.  The  rates  for  neutrals  are  usually 
somewhat  higher. 

Per  Cent 

July  28,  1914  1/4  of  1 

July  31,  1914  3 

August  4,  1914   10^4 

August  6,  1914   21 

September  5,  1914  4^^ 

January  14,   1915    Vi  oi  \ 

July  17,  1915   1 

December  2,  1916  3 

January  3,   1917    6 

February  2,  1917  8 

March  17,  1917  8-10 

September  12,  1917  7-12 

October  24,  1917   5-9 

November  14,  1917    4-9 

December  22,  1917 4-9 

January  12.  1918  4-9 

February  8,  1918   4-5 

March   15,    1918    3-4 

April  1,  1918  4 

Aoril  20,  1918  3 

May  13,  1918  2V2 

May  20,  1918  214 


58         influence  of  the  great  war  upon  shipping 

Inadequacy  of  Capital  of  Private  Companies 

So  far  reference  has  been  made  only  to  the  ordinary  marine 
insurance  facihties  in  existence  in  times  of  peace,  the  under- 
writers and  the  large  companies.  However,  we  must  not  place 
upon  them  the  blame  for  the  chaotic  condition  existing  in  ma- 
rine insurance  at  the  beginning  of  the  war,  the  prohibitive  and 
fluctuating  rates  and  the  resulting  halting  of  commerce.  The 
underwriters  and  the  companies  were  endeavoring  in  every  way 
to  meet  the  emergency  for  which  they  were  entirely  unprepared. 
They  could  not  be  prepared  for  it. 

Marine  insurance  is  ordinarily  a  business  that  can  be  con- 
ducted on  a  small  capital.  With  the  outbreak  of  the  war,  the 
insurance  market  was  called  upon  to  cover  not  only  the  risks 
arising  from  the  perils  of  the  sea,  but  also  a  second  line  many 
times  as  great — the  risks  arising  from  war.  The  underwriters 
did  not  possess  the  necessary  capital.  Increased  premiums  might 
fully  equal  the  losses  occurring  over  the  period  of  a  year,  but 
there  were  more  frequent  calls  for  the  payment  of  losses  than 
before  the  war. 

Again,  as  soon  as  commerce  was  partially  revived,  shipping 
prices  advanced  greatly.  The  value  of  vessels  advanced  from  50 
to  100  per  cent  and  in  some  cases  even  more;  freights  advanced 
500  per  cent;  and  cargoes  about  50  per  cent  in  value.  An  under- 
writer instead  of  being  called  upon  to  cover  the  ordinary  marine 
risk  on  a  vessel  valued  at  $400,000,  on  freights  valued  at 
$20,000,  and  cargo  valued  at  $1,000,000,  must  furnish  both 
marine  insurance  and  war  risk  insurance  on  a  $600,000  to  $800,- 
000  vessel,  $120,000  freights,  and  a  $1,500,000  cargo— two 
risks  of  $2,420,000  instead  of  $1,420,000,  one  risk  of  pre- 
war days — an  increase  of  $1,000,000  or  about  TO  per  cent. 
It  is  natural  that  the  underwriters  were  unable  to  handle  the 
situation  and  that  chaos  resulted.  Nor  is  it  astonishing  that  the 
underwriters  and  companies  advanced  their  rates  so  sharply  that 
they  were  soon  prohibitive. 


the  effects  of  the  war  on  marine  insurance       59 

The  Formation  of  Government  War  Risk  Bureaus 

Very  early  in  the  war,  however,  another  important  factor 
entered  the  insurance  field.  When  the  lack  of  insurance  facili- 
ties threatened  to  halt  all  commerce  for  the  duration  of  the  war 
and  when  it  was  perceived  that  private  capital  could  not  meet 
the  increased  demands  made  upon  it,  the  various  governments 
were  quick  to  act.  They  went  into  the  insurance  business.  With- 
in a  very  few  weeks  after  war  was  declared,  eleven  national  war 
risk  bureaus  were  in  operation  in  the  following  countries  :  Bel- 
gium, Denmark,  France,  Germany,  Greece,  Great  Britain,  Italy, 
Japan,  Norway,  Sweden   and  the  United  States. 

Although  all  the  bureaus  were  established  to  accomplish  the 
same  purpose,  the  protection  of  the  nation's  commerce,  they 
differ  in  their  methods  of  operation.  All  of  them,  however, 
follow  closely  one  of  the  four  general  plans  adopted  by  the 
United  States,  Great  Britain,  Japan  and  Norway,  respec- 
tively.^ 

The  United  States  War  Risk  Bureau 

In  the  United  States,  by  an  act  of  Congress,  approved  Septem- 
ber 2,  1914,  the  Bureau  of  War  Risk  Insurance  was  established 
as  a  bureau  of  the  Treasury  Department."  Mr.  William  C.  De 
Lanoy,  an  experienced  insurance  underwriter,  was  appointed 
Director  of  the  bureau  at  an  annual  salary  of  $5,000.  An  ad- 
visory board  of  three  members  skilled  in  the  practices  of  war 
risk  insurance  was  also  appointed  for  the  purpose  of  assisting 
the  bureau  in  fixing  rates  of  premium  and  in  the  adjustment  of 
claims  for  losses. 

The  original  act  empowered  the  bureau  under  the  direction 
of  the  Secretary  of  the  Treasury  to  make  provisions  for  the  in- 
surance by  the  United  States  of  American  vessels,  their  freight 
and  passage  moneys,  and  their  cargoes  against  loss  or  damage 
by  risk  of   war,   whenever   it  should   appear  to   the   Secretary 

'  Market  World  and  Chronicle,  October  24,  1914,  p.  523. 
=  Public  No.  193,  63d  Cong. 


60  INFLUENCE   OF    THE    GREAT    WAR    UPON    SHIPPING 

that  American  vessels,  shippers,  or  importers  in  American  ves- 
sels were  unable  in  any  trade  to  secure  adequate  war  risk  insur- 
ance on  reasonable  terms.  No  fixed. rates  were  established,  but 
it  was  provided  that  the  bureau  should  determine  the  rate  for 
each  voyage  according  to  the  character  of  the  vessel,  the  route 
taken,  and  the  cargo  carried.  Disputes  over  the  adjustment  of 
claims  were  to  be  settled  in  the  district  court  of  the  United 
States  in  the  district  in  which  the  claimant  or  his  agent  resided. 

An  appropriation  of  $5,000,000  was  made  from  the  Treasury 
of  the  United  States  for  the  purpose  of  paying  all  losses  and  an 
additional  $100,000  for  salaries  and  expenses  of  the  bureau. 
The  act  specified  that  the  bureau  might  be  suspended  by  the 
President  whenever  the  need  for  such  insurance  ceased  to  exist 
and  at  most  was  not  to  continue  more  than  two  years. ^  Later 
amendments  to  the  act  of  September  2,  1914,  have  extended  the 
time  of  operation  of  the  act  to  not  later  than  June,  1921." 

There  were  two  outstanding  features  of  the  United  States 
War  Risk  Insurance  Bureau  established  by  the  act  of  September 
2,  1914,  and  operating  while  the  United  States  remained  neutral. 
(1)  Insurance  was  issued  only  on  vessels  flying  the  American 
flag,  or  only  on  cargo  carried  in  American  vessels.  (2)  The 
premium  rate  might  be  fixed  for  each  voyage  by  the  bureau, 
although  in  practice  it  remained  almost  unchanged  for  certain 
of  the  safer  trade  routes. 

Before  the  United  States  entered  the  war,  the  bureau  refused 
to  cover  risks  on  any  cargo  that  might  be  considered  contraband 
by  the  belligerents.  Follov/ing  Germany's  declaration  of  unre- 
stricted submarine  warfare  in  February,  1917,  and  the  breaking 
of  diplomatic  relations  between  the  United  States  and  Germany, 
the  bureau  revised  its  regulations.  On  March  31,  rates  were  in- 
creased but  at  the  same  time  risks  on  cargoes  that  were  classed 
as  contraband  were  accepted,  thus  recognizing  the  practical  state 
of  war  with  Germany. 

Following  the  entrance  of  the  United  States  into  the  war, 

'  Public  No.  193,  63d  Cong. 
^  Public  No.  20,  65th  Cong. 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE         Gl 

an  amendment  to  the  act  above  outlined  was  passed  on  June  12, 
1917,  extending  radically  the  scope  of  the  Bureau  of  War  Risk 
Insurance.  The  bureau  was  authorized  to  make  provision  for  the 
reinsurance  by  the  United  States  of  vessels  of  foreign  friendly 
flags  or  their  cargoes,  or  both,  when  such  vessels  or  their  cargoes 
were  insured  by  the  government  of  a  country  at  war  with  an 
enemy  of  the  United  States,  and  also  to  reinsure  with  such  gov- 
ernments American  vessels  and  their  cargoes.  Additional  ap- 
propriations were  granted  to  the  bureau  by  this  amendment, 
$50,000,000  for  the  payment  of  losses  and  $250,000  for  the  ex- 
penses of  the  bureau.^ 

Under  the  amendment  of  June  12,  1917,  the  bureau  entered 
another  insurance  field.  Realizing  the  heavy  risk  of  death  in- 
curred by  officers  and  crews  of  the  merchant  vessels  entering  the 
submarine  zone.  Congress  authorized  the  bureau  to  establish 
a  Seaman's  Division  and  the  owners  of  American  vessels  were 
required  to  take  out  war  risk  insurance  for  the  officers  and  crews. 
Within  three  weeks  5,446  individuals  had  been  insured.  Under 
this  scheme  provision  is  also  made  for  the  payment  of  an  in- 
demnity for  loss  of  limb  or  any  other  permanent  disability.  A 
second  advisory  board  of  two  members  skilled  in  the  practices 
of  accident  insurance  was  appointed  for  the  purpose  of  assisting 
the  bureau  in  adjusting  claims  in  connection  with  the  seamen's 
insurance.^ 

At  the  present  time  the  Bureau  of  War  Risk  Insurance  is  ad- 
ministering not  only  the  marine  insurance  on  vessels  and  car- 
goes, but  also  the  accident  and  life  insurance  on  the  officers  and 
crews  of  merchant  ships  and  on  the  soldiers  and  sailors  in  the 
service  of  the  United  States. 

On  August  19',  1917,  the  bureau  issued  certain  specifications 
regarding  the  vessels  upon  which  insurance  would  be  placed. 
Ships  were  required  to  be  armed,  painted  to  reduce  visibility, 
provided  with  smokeless  fuel,  and  equipped  with  appliances  for 
producing  smoke  clouds  to  escape  torpedo  attack. 

'  Public  No.  20,  65th  Cong. 


62  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

The  British  War  Risk  Bureau 

The  war  did  not  find  Great  Britain  entirely  unprepared,  at 
least  as  far  as  war  risk  insurance  was  concerned.  In  1908  the 
committee  on  a  national  guarantee  for  the  war  risks  of  shipping 
was  appointed  by  the  British  Parliament.  A  lengthy  investiga- 
tion was  conducted  by  the  committee  and  their  report  and  rec- 
ommendations were  published  but  no  legislative  action  followed.'- 
In  July,  1913,  another  committee  was  appointed,  which  in  May, 
1914,  submitted  to  Parliament  a  government  war  risk  insurance 
scheme  which  was  accepted  by  Parliament  on  the  Monday  before 
war  was  declared." 

Although  there  was  no  time  to  work  out  some  of  the  details, 
the  British  scheme  of  war  risk  insurance  was  put  into  operation 
during  the  first  week  of  August,  1914,  dealing  separately  with 
hulls  and  cargoes.  The  insurance  on  the  hulls  was  worked  in 
conjunction  with  mutual  clubs  which  existed  when  war  was  de- 
clared. All  vessels  were  required  to  be  insured  in  one  of  these 
clubs  or  associations.  The  clubs,  in  turn,  reinsured  with  the 
government  SO  per  cent  of  their  war  risk  on  vessels,  the  gov- 
ernment receiving  the  same  proportion  of  the  premiums.  The 
scheme  applied  only  to  British  vessels  and  required  owners  and 
their  captains  to  conform  to  all  instructions  issued  by  the  Ad- 
miralty. 

Only  cargoes  carried  in  vessels  insured  by  the  clubs  or  other 
associations  approved  by  the  government  were  insured  by  the 
government  office.  A  minimum  and  a  maximum  premium  rate 
was  recommended  by  the  committee  responsible  for  the  scheme, 
but  as  there  was  not  sufficient  time  to  fix  such  premiums  on  the 
basis  of  possible  risks,  a  flat  rate  was  established.  In  this  respect 
the  British  scheme  differs  from  the  scheme  adopted  in  the  United 
States,  the  latter  in  theory  determining  the  rate  for  each  voyage 
and  the  former  fixing  a  definite  flat  rate  for  all  voyages. 

'  Report  of   Committee  on   a  National   Guarantee   for  the   War  Risks  of 
Shipping,  Wyman  and  Sons,  Limited,  London,  1908. 
'  f  airplay,  January  o,  1918,  p.  102. 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE         63 

The  aims  of  the  government  War  Risk  Bureau  were  two : 
First,  the  maintenance  of  the  British  overseas  trade,  the  ex- 
change of  manufactures  and  coal  for  the  nation's  supplies  of 
food  and  raw  materials.  Second,  the  concentration  of  the  Royal 
Navy  on  its  primary  duty  of  defeating  the  naval  strength  of  the 
enemy,  by  relieving  it  from  the  demands  of  the  individual  trader 
and  shipowner  for  protection  against  individual  loss. 

On  August  19,  1917,  a  new  plan  for  the  insurance  of  hulls 
went  into  effect  in  Great  Britain.  In  many  cases  under  the 
first  scheme,  the  premiums  received  by  the  clubs  had  not  been 
sufficient  to  meet  the  losses  and  the  balance  had  to  be  made  good 
by  calls  on  the  members.  Under  the  new  plan,  the  entire  liability 
is  at  the  risk  of  the  government,  and  more  definite  provisions 
are  also  made  to  determine  the  value  of  vessels  lost.  Risks  were 
divided  into  three  classes,  fully  requisitioned  steamers,  vessels 
under  liner  requisition,  and  freight  ships.  The  government  as- 
sumes responsibility  for  all  war  risks  on  vessels  of  the  first  class, 
whether  total  or  partial,  and  in  case  of  total  loss  payment  is  to 
be  made  on  the  "  ascertained  value."  The  government  also  pays 
claims  for  particular  average,  salvage  charges,  and  general 
average  in  case  the  vessel  is  damaged  and  not  totally  lost.^ 

The  same  risks  are  covered  on  vessels  of  the  second  class, 
but  in  case  of  total  loss  the  owner  is  to  have  the  option  of  re- 

'  "  The  loss  resulting  from  any  of  the  perils  above  mentioned  (perils  of 
the  sea,  war  risks,  etc.)  may  be  a  partial  loss  and  may  be  settled  either  in 
accordance  with  '  general  average  '  or  '  particular  average  '  rules.  The  mari- 
time laws  of  nations  ordinarily  provide  that  any  loss  resulting  from  a  volun- 
tary or  deliberate  sacrifice  of  vessel,  cargo,  or  other  property  for  the  common 
safety  and  welfare  should  not  be  borne  entirely  by  the  particular  owners  of 
the  sacrificed  properties,  but  should  be  fairly  prorated  among  all  interests 
that  are  benefited  by  such  sacrifice.     This  rule  is  known  as  general  average. 

A  partial  loss  may  also  be  settled  in  accordance  with  the  '  particular 
average  '  rule,  i.  c,  when  the  property  insured  is  damaged  by  accident  or 
is  not  destroyed  by  the  master  of  the  vessel  for  the  purpose  of  saving  other 
property,  the  loss  must  be  borne  entirely  by  the  owners  of  the  damaged 
property  or  by  its  insurers. 

A  partial  loss  or  liability  may  result  from  the  payment  of  salvage,  which 
is  the  reward  granted  by  law  to  those  who  save  life  and  property  at  sea. 
If  a  vessel  in  distress  receives  assistance  from  another  vessel  and  is  towed 
to  port,  the  vessel  giving  assistance  may  claim  salvage,  and  the  amount  legally 
due  is  payable  by  the  owner  or  by  the  insurer  of  the  vessel  and  cargo  to 
which  assistance  is  given."  Johnson  and  Huebner:  Principles  of  Ocean 
Transportation,  p.  248. 


64  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

covering  the  loss  on  the  "  ascertained  value  "  or  on  the  amount 
insured  under  his  policies  which  is  based  on  the  government 
value,  as  at  present  calculated,  plus  an  excess  value  to  be  fixed 
by  the  committee  and  approved  by  the  controller. 

Freight  ships  are  to  be  insured  against  the  risks  of  war  under 
policies  for  voyages  at  rates  to  be  fixed  from  time  to  time.  In 
all  three  cases  compensations  and  allowances  to  dependents  of 
officers  and  crew  up  to  the  government  scale  will  be  paid.^ 

When  the  submarine  policy  of  Germany  threatened  to  cut  off 
England  from  her  sources  of  supplies,  the  government  war  risk 
insurance  was  extended  to  all  neutrals  trading  with  the  United 
Kingdom.  The  rate  was  the  same  as  the  rate  offered  to  British 
shipping  and  was  several  per  cent  below  the  rate  enforced  on  the 
open  market.  It  was  realized  that  the  government  would  prob- 
ably suffer  heavy  losses  because  of  such  low  rates,  but  that  the 
increased  imports  from  neutrals  thus  gained  would  more  than 
offset  any  possible  loss. 

The'scheme  of  war  risk  insurance  in  operation  in  Great  Britain 
has  not  proved  entirely  satisfactory.  The  flat  rate  fixed  by  the 
bureau  has  been  too  low  for  the  dangerous  trades  and  too  high 
for  the  safer  trades.  As  a  result  the  safer  risks  have  been  in- 
sured in  the  open  market  and  the  dangerous  risks  have  been  left 
to  the  government.  The  deficit  of  the  bureau  has  had  to  be 
made  up  by  taxing  the  people. 

In  October,  1917,  several  changes  were  being  considered  to 
remedy  this  feature.  It  was  proposed  to  do  away  with  the  flat 
rate  and  to  fix  rates  each  day  through  a  special  body  of  experi- 
enced underwriters.  The  government  was  to  insure  all  cargoes, 
nonrequisitioned  as  well  as  requisitioned,  thus  closing  the  free 
war  risk  market.  Such  a  scheme  was  opposed  by  the  English 
underwriters  because  of  the  insurance  monopoly  given  to  the 
government. 

Recently  the  flat  rate  was  abandoned  and  premiums  are  now 
being  determined  according  to  the  risk  of  the  voyage.  There  ap- 
peared in  the  New  York  Journal  of  Commerce  for  May  24,  1918, 

'  The  Mariner,  September  15,  1917,  p.  269. 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE         65 

a  Statement  issued  by  the  British  War  Risk  Insurance  Office  re- 
ducing the  rate  on  voyages  between  the  United  Kingdom  and 
the  east  coast  of  North  or  Central  America  from  GO  shilHngs 
per  hundred  to  45  shilHngs  and  on  voyages  between  the  United 
Kingdom  and  the  east  coast  of  South  America  from  70  shillings 
per  hundred  to  60  shillings.  The  same  announcement  established 
a  rate  of  7  per  cent  on  voyages  from  the  United  Kingdom  direct 
to  Greece. 

The  Japanese  War  Risk  Plan 

The  plan  adopted  in  Japan,  September  12,  1914,  differed  radi- 
cally from  either  of  the  above  plans.  No  government  war 
risk  bureau  was  established,  but  insurance  was  handled  entirely 
through  the  usual  prewar  channels,  the  underwriters  and  the 
insurance  companies.  Since  most  of  the  Japanese  commerce  was 
far  removed  from  the  region  of  the  submarine  or  the  German 
raider,  the  need  for  a  government  war  risk  bureau  was  not  felt. 
Up  to  the  end  of  1915  only  two  steamers  owned  in  Japan  had 
been  lost  by  a  war  risk. 

Following  is  an  extract  from  the  15th  Financial  and  Economic 
Journal  of  Japan  (1915)  issued  by  the  Japanese  Government 
descriptive  of  the  Japanese  scheme  of  war  risk  insurance: 

The  War  Marine  Insurance  Indemnity  Act  was  promul- 
gated on  September  11,  1914,  and  the  Ordinance  No.  19  of 
the  Department  of  Agriculture  and  Commerce  on  the  fol- 
lowing day,  and  both  were  immediately  put  in  force. 
According  to  the  act  above  referred  to,  if  any  Japanese 
insurance  company,  or  any  foreign  insurance  company 
having  branches  in  Japan,  makes  a  war  insurance  contract 
at  a  premium  not  higher  than  the  rate  fixed  by  the  com- 
petent authorities  and  makes  good  therefore  any  loss  or 
damage  caused  by  the  war,  the  government  is  to  grant 
as  an  indemnity  to  such  insurance  company  a  portion  of 
the  sum  thus  made  good.  It  is  provided  for  in  Ordinance 
No.  19  of  the  Department  of  Agriculture  and  Commerce 
that  the  amount  to  be  so  granted  by  way  of  indemnities 
shall  be  80  per  cent  of  the  sum  thus  made  good.^ 
'  The  Economic  World,  February  19,  1916,  p.  258. 


66  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

In  Other  words,  Japanese  insurance  companies,  or  foreign 
insurance  companies  with  branch  offices  in  Japan,  insuring  ves- 
sels at  rates  not  higher  than  the  maximum  fixed  by  the  govern- 
ment are  indemnified  by  the  government  to  the  extent  of  SO  per 
cent  of  all  their  losses  and  are  permitted  to  retain  all  of  their 
premiums.  The  companies  carry  but  20  per  cent  of  the  risk, 
but  are  paid  100  per  cent  of  the  premium.  The  proposal  covers 
both  Japanese  hulls  and  cargoes  and  also  cargoes  exported  to 
or  from  Japan  by  steamers  of  any  nation  except  an  enemy,  be- 
tween points  specified  by  the  government.  In  January,  1915, 
a  new  arrangement  was  made  allowing  the  risk  on  vessels  leav- 
ing England  for  Japan  to  be  covered  in  London  without  cabling 
to  Japan,  the  bill  of  lading  being  endorsed  to  the  effect  that  the 
cargo  had  been  insured  against  war  risk.^ 

The  original  scheme  continued  in  force  until  the  losses  paid 
out  for  the  few  Japanese  vessels  sunk  proved  to  be  too  heavy  a 
burden  on  the  treasury.  In  September,  1917,  a  new  scheme 
came  into  operation  under  which  the  government  fixed  the 
premium,  received  it,  and  paid  the  loss,  a  government  bureau 
taking  the  place  of  the  government  aided  insurance  underwriters 
and  companies." 

The  Norwegian  War  Risk  Plan 

In  Norway  a  company  was  formed  to  take  20  per  cent  of  the 
war  risk  insurance  on  all  goods  shipped  to  or  from  Norway. 
The  remaining  80  per  cent  of  the  war  risk  is  assumed  by  the 
state  and  the  assured.  War  risk  on  hulls  of  steamers  is  com- 
pulsory in  a  mutual  association  which  has  been  established  in 
Christiania.  The  owner  is  allowed  to  take  20  per  cent  of  the 
insurance  himself.  A  maximum  and  a  minimum  premium  has 
been  fixed.^ 

'  Fairplay,  January  21,  1915,  p.  88. 

=  Ibid.,  January  3,  1918. 

'  Ibid.,  October  8,  1914,  p.  581. 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE  b( 

The  Rates  of  the  Government  War  Risk  Bureaus 

In  general  the  rates  of  the  government  war  risk  bureaus  have 
been  considerably  under  the  rates  charged  by  private  companies. 
The  market  rate  on  voyages  between  the  United  Kingdom  and 
the  United  States  on  August  6,  1914,  was  20  guineas  per  hun- 
dred, and  the  British  Government  war  risk  rate  on  the  following 
day  was  4  guineas  for  the  same  voyage.  In  August,  1917,  the 
United  States  War  Risk  Bureau  increased  its  rates  between 
United  States  ports  and  European  and  Mediterranean  ports 
from  5  per  cent  to  6%  per  cent.  At  the  same  time  the  open 
market  rate  quoted  in  New  York  was  7^/^  per  cent  to  10  per  cent 
to  British  ports,  12  per  cent  to  Havre,  and  10  to  15  per  cent 
to  Mediterranean  ports. 

In  February,  1917,  the  rate  charged  by  the  British  Govern- 
ment was  3  per  cent  as  compared  with  the  flat  rate  of  10  per  cent 
enforced  on  the  local  market.  During  the  same  month,  the 
United  States  Bureau  quoted  a  rate  of  2  per  cent  although  the 
prevailing  market  rate  was  9  to  10  per  cent. 

Effect  of  Government  Bureaus  on  Private  Companies 

The  natural  conclusion  to  draw  from  such  low  rates  would 
be  that  all  the  business  had  gone  to  the  government  bureaus  and 
that  private  companies  had  been  forced  to  discontinue,  but  such 
has  not  been  the  case.  Most  of  the  government  bureaus  are  so 
hedged  in  by  restrictions  and  conditions  that  many  vessels  find 
it  impossible  to  secure  insurance  from  them.  In  the  first  place, 
with  few  exceptions,  the  bureaus  are  permitted  to  write  insur- 
ance only  upon  vessels  flying  the  flag  of  the  respective  countries 
that  established  them.  As  a  neutral  the  United  States  bureau 
declined  to  underwrite  the  war  risk  on  all  commodities  that  had 
been  held  to  be  contraband  by  any  of  the  belligerent  Powers, 
or  which  were  in  cargoes  any  part  of  which  consisted  of  such 
contraband.  For  that  reason,  insurance  on  cotton  could  not 
be  obtained   from  the  government  War  Risk  Bureau  even  in 


68  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

American  bottoms.  The  restrictions,  as  has  been  pointed  out 
above,  were  modified  when  the  United  States  became  a  belHger- 
ent,  but  vessel  owners  must  still  follow  closely  regulations  re- 
garding equipment  and  coal  before  insurance  will  be  granted  by 
the  bureau. 

The  text  of  the  law  creating  the  War  Risk  Insurance  Bureau 
also  specifically  provides  that  war  risk  insurance  shall  be  issued 
"  whenever  it  shall  appear  to  the  Secretary  that  American  ves- 
sels, shippers  or  importers  in  American  vessels,  or  the  masters, 
officers,  or  crews  of  such  vessels  are  unable  in  any  trade  to  se- 
cure adequate  war  risk  insurance  on  reasonable  terms." 

As  we  have  shown  in  an  earlier  paragraph,  the  flat  rate  of 
the  British  War  Risk  Bureau  proved  to  be  too  low  for  dangerous 
voyages  and  too  high  for  the  safer  trades,  resulting  in  most  of 
the  insurance  on  safer  trades  being  carried  on  the  open  market. 

In  both  the  United  States  and  Great  Britain  the  value  of  the 
business  done  by  the  government  bureaus  has  been  a  very  small 
part  of  the  marine  insurance  business  transacted.  The  report 
for  the  United  States  War  Risk  Bureau  issued  in  August,  1917, 
shows  that  from  the  founding  of  the  bureau,  September  2,  1914, 
to  June  30,  1917,  insurance  to  the  amount  of  $623,904,598  was 
written  and  that  premiums  were  received  to  the  amount  of 
$15,208,730.37.'  For  the  year  1916  alone,  the  thirty-two  ma- 
rine insurance  companies  reporting  to  the  State  of  New  York 
covered  marine  risks  totaling  $1,214,119,435  and  received  in 
premiums  $42,137,536.  The  latest  report  of  the  bureau,  Janu- 
ary 6,  1918,  showed  that  only  $1,001,537,525  in  insurance  had 
been  issued  up  to  January  1,  1918. 

Despite  the  small  amount  of  insurance  carried  by  the  govern- 
ment bureaus,  they  have  given  very  valuable  aid  to  shipping. 
They  have  been  successful,  not  because  they  have  monopolized 
the  marine  insurance  market  and  covered  enormous  risks,  but 
because  they  have  served  as  a  steadying  influence  for  the  private 
companies  and  have  prevented  the  charging  of  unreasonable 
and  prohibitive  rates.     They  came  to  the  rescue  of  commerce 

'  The  Economic  World,  August  4,  1917,  p.  170. 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE  69 

at  a  time  when  the  ordinary  insurance  facilities  were  in  a  condi- 
tion of  chaos. 

In  an  address  in  the  summer  of  1915,  Sir  Edward  Hain, 
Chairman  of  the  London  General  Shipowners  Society,  declared 
that  the  introduction  of  the  government  scheme  for  war  risk 
insurance  at  the  outbreak  of  the  war  had  done  much  to  prevent 
panic  rates  for  insurance  and  had  given  confidence  to  shipowners 
to  continue  their  oversea  trading.^ 

Their  steadying  influence  may  be  seen  in  the  higher  rates 
charged  on  neutral  vessels  in  Great  Britain  soon  after  the  be- 
ginning of  the  war.  The  government  bureau  was  permitted  to 
underwrite  the  risks  only  on  cargoes  carried  in  British  hulls  and 
the  insurance  on  neutral  hulls  and  cargoes  had  to  be  taken  in 
the  open  market.  Since  there  was  no  competition  with  the  gov- 
ernment bureau,  the  underwriters  were  able  to  quote  whatever 
rates  they  liked  without  fear  of  losing  business.  In  September, 
1914,  cargoes  in  British  steamers  were  being  insured  for  four 
guineas  per  hundred,  but  cargoes  in  Dutch  and  Japanese  hulls 
were  paying  private  companies  six  and  seven  guineas. 

The  Continuation  of  the  Government  Bureaus  after  the  War 

The  government  war  risk  bureaus  upon  their  establishment 
were  regarded  universally,  even  by  the  marine  insurance  under- 
writers, as  highly  beneficial  institutions.  But  already  their 
future  is  being  viewed  with  suspicion,  especially  by  the  business 
world,  now  that  the  insurance  market  has  adjusted  itself  to  the 
changed  conditions.  The  fear  is  expressed  in  the  United  States 
that  the  bureau  is  only  a  forerunner  of  government  ownership 
of  a  business  that  has  always  been  a  private  enterprise.  The 
bureau  is  being  branded  as  socialistic  and  hostile  to  the  rights 
of  the  individual. 

The  editor  of  The  Economic  World  in  the  issue  for  April  1, 
1916,  opposed  the  continuing  of  the  government  bureau  beyond 
the  period  of  two  years  provided  for  by  the  act  creating  it  in 

'  Fairplay,  July  29,  1915,  p.  187. 


70  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

1914.  In  a  later  issue,  after  commending  highly  the  work  of 
the  bureau  and  especially  its  extension  of  insurance  to  the 
officers  and  crews  of  merchant  ships,  the  editor  concludes : 

At  the  same  time  it  is  well  to  keep  clearly  before  the 
public  mind  that  acquiescence  in  this  war  arrangement  is 
not  to  be  construed  to  be  acquiescence  in  the  perpetuation  of 
this  great  government  insurance  after  the  war  is  con- 
cluded. Insurance  men  and  all  other  American  citizens 
who  hold  government  monopolies  to  be  an  anathema  in 
times  of  peace  and  normal  activities  should  keep  this  point 
continually  in  mind. 

Marine  Insurance  and  World  Trade 

The  war  has  brought,  and  is  bringing,  many  lessons  forcibly 
home  to  the  people  of  the  United  States.  We  are  beginning  to 
realize  the  fallacy  of  allowing  our  merchant  marine  to  decline 
from  the  proud  position  it  occupied  seventy  years  ago  to  the  few 
vessels  flying  the  American  flag  at  the  outbreak  of  the  war.  An 
effort  is  being  made  to  remedy  the  mistake  and  a  fleet  of  mer- 
chant vessels  is  now  leaving  our  shipyards  which  will  soon  re- 
establish the  United  States  as  a  powerful  commercial  nation. 

But  shipping  is  only  a  part  of  the  foundation  of  international 
trade.  Mr.  Evans,  president  of  the  Continental  Insurance 
Company  and  the  Fidelity-Phenix  Insurance  Company,  recently 
somewhat  overstated  the  financial  side. 

The  economic  proposition  at  the  base  of  the  foreign  trade 
of  every  nation  is  the  union  of  banking,  shipping,  and  in- 
surance strength.  In  the  absence  of  any  of  the  three,  the 
other  two  factors  will  be  exposed  to  weakness  that  will 
inevitably  bring  waste  or  loss,  if  not  failure.  Great  Britain 
has  commanded  the  foreign  trade  of  the  world  because  she 
has  financed  it  herself,  carried  it  herself,  and  protected  both 
its  credit  and  its  losses  by  insuring  every  possible  dollar  of 
her  own  trade,  when  possible,  with  her  own  insurance.^ 

The  Federal  Reserve  Act  opened  the  way  for  the  banking 
independence  of  the  United  States-  in  world  trade;  our  merchant 
'  Spectator,  November  15,  1917,  p.  206. 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE  71 

marine  is  being  reestablished;  the  third  member  of   the  com- 
mercial triad,  insurance,  must  not  be  neglected. 

Growth  of  Marine  Insurance  in  the  United  States 

Since  1914 

It  is  true  that  there  has  been  a  marked  growth  in  the  insur- 
ance facilities  of  the  United  States  since  1914.  Before  the  war 
there  were  about  2-4  marine  insurance  companies  operating  in 
New  York  City.  In  October,  1917,  there  were  87  companies  of 
which  53  were  American.  At  the  close  of  1916,  the  reports 
of  the  32  marine  insurance  companies  reporting  to  the  State  of 
New  York  showed  that  during  the  preceding  year  they  had 
issued  insurance  to  the  amount  of  $1,214,119,435,  an  increase 
over  1915  of  41  per  cent  and  that  the  total  income  of  the  com- 
panies for  the  year  was  over  $50,000,000,  an  increase  over  1915 
of  about  40  per  cent. 

In  October,  1917,  announcement  was  made  that  an  American 
Lloyd's  had  been  established  in  New  York  City.  The  Old 
Delmonico  Building  has  been  leased  and  will  be  remodeled  as  an 
insurance  exchange.  There  underwriters  will  meet  and  be  pre- 
pared to  accept  business  offered  without  the  many  delays  caused 
by  the  present  decentralization  of  insurance  facilities. 

The  President's  Proclamation,  July  14,  1917,  closing  for  the 
duration  of  the  war  the  American  branches  of  the  German  ma- 
rine insurance  companies,  opens  a  new  field  to  the  American 
companies.  No  doubt  British  competition  will  be  keen,  but  the 
growing  American  companies  should  be  able  to  retain  the  major 
share  of  the  insurance  in  this  country. 

A  Lesson  of  the  War 

War  has  shown  the  weakness  of  the  structure  of  our  inter- 
national trade  built  up  in  times  of  fancied  security  and  the  in- 
ternationalism of  capital.  Our  commerce  was  paralyzed  and 
foreign  markets  were  closed  to  us  because  of  the  lack  of  ma- 
rine insurance   facilities.     Shipment  of  gold   from  the  United 


72  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

States  was  effectually  checked,  beneficial  as  such  restriction  may 
have  been.  Such  interference  with  our  commerce  will  be  possible 
just  as  long  as  we  continue  to  depend  entirely  upon  foreign 
companies  for  our  marine  insurance. 

Two  remedies  are  open  to  the  people  of  the  United  States 
involving  two  opposing  economic  concepts.  First,  we  can  develop 
a  national  independence  of  marine  insurance  facilities  just  as 
we  are,  for  the  moment  at  least,  developing  our  shipping  inde- 
pendence. Through  government  subsidies  and  restrictive  legis- 
lation, probably  involving  higher  cost,  we  can  encourage  the 
establishing  of  marine  insurance  companies  and  underwriters' 
associations  which  can  be  conducted  profitably  because  of  the 
government  aid  and  despite  the  scarcity  of  capital  and  the  high 
rate  of  interest  prevalent  in  this  country. 

Secondly,  we  can  establish  by  congressional  action  the  neces- 
sary machinery  to  create  overnight,  in  case  of  war,  a  govern- 
ment war  risk  bureau  similar  to  the  present  one.  Or  the  present 
bureau  can  be  made  a  permanent  bureau  to  be  put  into  operation 
only  in  case  of  a  national  emergency.  With  such  a  latent  remedy 
always  at  hand  we  can,  if  it  is  less  expensive,  continue  to  depend 
in  times  of  peace  upon  foreign  companies  for  our  marine  in- 
surance, purchasing  in  the  cheapest  market,  whether  that  mar- 
ket be  English,  French,  or  Japanese. 

Of  the  two  schemes,  the  second  is  undoubtedly  the  safer  policy 
to  follow.  Encouraging  as  has  been  the  development  of  marine 
insurance  facilities  in  the  United  States  during  the  war,  it  is 
doubtful  if  this  development  can  continue  without  substantial 
government  aid  when  conditions  of  international  competition 
have  been  restored.  Laboring  as  we  are  under  the  handicap  of 
high  construction  and  operation  costs  of  our  merchant  marine, 
it  is  important  that  we  secure  our  insurance  in  the  cheapest  mar- 
kets if  we  expect  to  compete  successfully  with  the  ships  of  other 
nations.  The  experience  of  the  nations  at  the  outbreak  of  the 
present  war  is  ample  proof  that  national  independence  of  insur- 
ance facilities  is  not  sufficient  protection  against  blockade  of  the 
merchant  fleet.     The  merchant  marine  of  Great  Britain,  backed 


THE    EFFECTS    OF    THE    WAR    ON    MARINE    INSURANCE        16 

by  Lloyd's  Association  and  the  powerful  British  marine  insur- 
ance companies,  was  as  effectively  blockaded  during  the  first  days 
of  the  war  as  was  the  merchant  marine  of  the  United  States  de- 
pendent upon  the  German  and  British  companies.  Not  until 
the  British  Government  War  Risk  Scheme,  accepted  by  Parlia- 
ment a  few  days  before,  was  put  into  operation  was  the  blockade 
lifted  and  not  until  the  United  States  followed  the  example  of 
Great  Britain  in  September,  1914,  were  ships  of  this  country 
free  to  leave  port.  In  the  meantime,  much  valuable  time  had 
been  lost  while  the  bureaus  were  being  established,  rates  deter- 
mined and  policies  prepared  and  printed. 

Dependence  on  foreign  insurance  is  very  different  from  de- 
pendence on  foreign  shipping.  Insurance,  under  a  government 
war  risk  scheme,  can  be  created  in  twenty-four  hours,  if  the  plans 
are  laid  in  advance;  the  creation  of  a  merchant  marine  may  re- 
cjuire  twenty-four  months  or  more,  even  if  well  planned  in  ad- 
vance. There  appears,  therefore,  no  greater  reason  to  work  for 
complete  independence  in  marine  insurance  than  there  is  in  com- 
plete independence  in  bananas  or  money  to  lend. 


CHAPTER  IV 

Trade  Dislocations  Due  to  War — Some  Possible 
Readjustments 

Worldwide  Trade  Changes 

Afghanistan,  buffer  state,  untouched  by  jealous  Britain  and 
jealous  Russia,  has  been  a  closed  land,  one  of  the  last  refuges  of 
unchecked  barbarism.  Here  before  the  Great  War  a  white  man 
went,  if  at  all,  at  the  risk  of  his  life.  In  the  summer  of  1915  a 
native  of  this  no  man's  land  gathered  up  a  few  mule  loads  of 
country  produce  and  went  down  160  miles  to  the  head  of  the 
British  railway  to  trade  at  the  annual  fair,  as  was  his  wont. 
The  market  was  glutted.  No  buyers  were  there.  He  was  tokl 
that  the  Hindus  who  usually  bought  his  wares  had  gone  over  the 
sea  to  a  white  man's  war.  "  Humph!  "  said  the  Mohammedan, 
''  I  don't  care,  I  will  take  my  stuff  over  to  the  Russian  railway." 
*'  The  Russians  have  gone  to  the  war,  too,"  he  was  told,  "  and 
the  railroad  will  carry  no  freight."  Whereat  the  indigene  cursed 
all  unbelievers  and  carried  his  produce  back  to  his  fastnesses 
where  it  probably  still  awaits  the  return  of  peace. 

Long  indeed  will  be  the  search  to  find  the  people,  even  the  man, 
whose  daily  life  has  not  been  changed  in  some  respect  by  the 
trade  disturbances  arising  from  this  war.  The  world  trade  of 
1914  is  no  more.  Trade  has  always  been  the  football  of  states- 
men, but  nothing  like  the  disturbances  of  the  present  has  occurred 
in  the  modern  epoch.  Several  distinct  factors  have  combined  to 
destroy  the  old  and  make  a  new  commercial  world. 

Factors  That  Have  Altered  Trade 

(a)  Rise  of  Munition  Trade. 

Munitions  and  war  supplies  suddenly  became  one  of  the  major 
demands  of   world   commerce,   rather  than   one   of   the   minor 

74 


TRADE    DISLOCATIONS    DUE    TO    WAR  7o 

articles,  and  their  fabrication  suddenly  took  the  time  of  millions 
of  workers. 


(b)  Decline  of  Food  Production  and  Increase  of  Food  Con- 
sumption. 

The  putting  of  millions  of  men  under  arms  reduced  food  pro- 
duction at  once  in  the  warring  countries,  increased  food  consump- 
tion and  multiplied  the  demand  for  it  in  international  trade. 

(c)  The  Stopping  of  Exports  from  Central  Empires  and  Russia. 
World  commerce  was  impoverished  by  losing  the  goods  of 

Germany  and  Austria,  due  to  the  Allied  blockade,  and  of  Russia, 
due  to  the  closing  of  the  Dardanelles. 

{d)  Declining  Ship  Supply. 

A  diminishing  ship  supply  restricted  ocean  transportation. 
This  diminished  ship  supply  was  partly  real,  due  to  the  destruc- 
tion and  internment  of  vessels,  and  the  cessation  of  building,  and 
partly  constructive,  due  to  the  necessity  of  transatlantic  voyages 
replacing  shorter  European  voyages,  to  the  lessened  efficiency  of 
shipping  under  war  conditions  and  also  the  actual  increase  of 
trade  in  supplying  armies.  The  movement  of  Canadian  and 
Australian  and  Siberian  troops  alone  almost  amounted  to  the 
transport  of  nations  and  their  support  over  sea. 

(e)  Declining  Man  Power. 

All  this  creation  of  burdens  fell  upon  diminishing  man  power, 
and  has  resulted  in  great  efforts  to  increase  the  labor  supply  in 
many  countries. 

(/)  Prevention  of  Exports  to  Central  Empires. 

Commerce  was  further  embarrassed  by  the  necessity  of  pre- 
vention of  trade  with  the  enemy — a  most  difficult  thing  to  do,  as 
witness  the  relative  failure,  the  innumerable  orders,  restrictions, 
foreign  complications  and  animosities  that  have  resulted. 


76  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

{g)  Governmental  Restrictions  of  Industry. 

The  necessity  of  keeping  home  industries  going  under  the  re- 
duced conditions  of  labor,  materials  and  transport  has  brought  in 
its  wake  a  train  of  restrictions  almost  as  rigid  as  the  blockade  of 
Germany. 

As  a  result  of  all  these  causes,  the  nations  have  been  compelled 
to  take  control  of  industry  almost  as  definitely  as  they  have  of 
the  life  of  the  conscript  in  the  army.  Nations  have  been  rationed 
as  to  the  food  they  should  eat.  Industry  has  been  rationed  as  to 
the  raw  material  it  should  get.  Priority  orders  decide  what  in- 
dustry shall  get  supplies  and  what  shall  be  starved.  Licensing 
boards  have  permitted  or  checked  the  issuance  of  capital,  and  the 
building  of  works.  The  national  complex  of  railroad  companies 
has  been  welded  into  one  system  in  all  the  major  warring  coun- 
tries. Import  and  export  trade  have  been  put  on  the  war  basis 
of  license  or  prohibition  as  public  needs  seem  to  demand,  and, 
lastly,  ocean  shipping  and  the  management  of  ocean  traffic  is 
being  pooled  by  the  Allies  in  a  way  identical  to  the  pooling  of 
traffic  and  equipment  by  the  nationalized  railway  systems  of  the 
United  States  or  England. 

As  the  war  wears  along  into  its  fourth  year  (May,  1918), 
every  disturbing  factor  is  becoming  more  acute — war  materials, 
food,  man  power,  ship  shortage,  and  the  consequent  necessity  for 
more  rigorous  economies  of  labor,  material,  railway  and  ship 
transportation  is  even  more  apparent.  Trade  is  being  daily 
brought  down  nearer  and  nearer  to  the  bare  bones  of  naked 
necessity. 

The  Paralysis  of  Trade 
Statistics  can  never  measure  the  trade  disturbances  of  this  war; 
partly  because  they  are  incomplete,  partly  because  some  that  we 
most  desire  are  unavailable,  and  probably  will  not  be  available 
until  after  the  war,  and  partly  because  mere  statistics  can  not 
measure  anguish.  Nevertheless  the  charts  of  vessel  movements 
even  down  to  the  end  of  1916,  the  last  year  available,  are  very 
significant.  A  comparison  of  1913  and  1916  shows  that  Britain 
received  from  the  Argentine  a  million  less  tons  of  shipping,  the 


TRADE   DISLOCATIONS    DUE    TO    WAR  i  i 

movement  having  shrunk  from  2,000,000  to  1,000,000.  The 
outgoing  ships  to  Argentina  fell  away  twice  as  much.  From 
Australia  400,000  tons  less  of  shipping  arrived,  while  the  tragedy 
of  the  closing  of  Russia  is  shown  by  the  falling  away  of  vessels 
from  3,o00,000  to  less  than  750,000,  with  departures  reduced 
to  an  even  greater  extent.  The  figures  of  Norway  and  the 
United  States  show  a  substantial  increase  as  a  measure  of  the 
attempts  to  replace  the  old  with  new  trades. 

Examination  of  traffic  movements  shows  even  more  significant 
facts.  Coal,  upon  which  our  age  depends  and  for  which  most 
of  the  importing  world  has  looked  to  Britain,  shows  painful  de- 
cline in  Britain's  exports.  Italy's  supply  from  this  source  fell 
from  nearly  10,000,000  to  less  than  0,000,000;  Greece  lost  more 
than  three-fourths  of  her  supply;  Egypt  nearly  as  much;  Argen- 
tina went  from  over  3,500,000  tons  to  less  than  750,000. 
Sweden,  suspected  of  being  too  friendly  to  Germany,  got  dropped 
from  4,500,000  to  1,000,000,  but  Norway,  the  busy  supplier  of 
Britain,  was  allowed  coal  to  take  back  in  her  ore,  w'ood,  and  pulp 
carrying  ships.  But  Denmark  and  the  Netherlands,  both  adja- 
cent to  Germany,  both  in  the  zone  of  the  submarine,  show  heavy 
decrease,  which  helps  explain  the  economic  disturbance  of  those 
countries. 

For  a  time  the  gap  caused  by  the  shortage  of  British  coal 
was  partly  filled  by   American  coal    (see  table),   but  the   ship 

COAL  EXPORTS  OF  UNITED  STATES 
Tons,  000  Omitted 
1912  1913  1914  1915  1916  1917 

Italy    276  2,Z2  776  1,628  2,833  1.099 


Greece 


101       89 


Soain  16      50      42      100      160 

l?ane ■:::".■.:: :■.:■.:■.  43      16      47        50       iso 

Argentina    156  38  139  564  782  706 

Brfzil   307  236  239  527  681  756 

Chile   29  112  84  58  152 

shortage  has  now  wiped  out  that  possibility,  as  evidenced  by  the 
nearly  tenfold  increase  in  the  Italian  supply  from  us  between 
1913  and  1910,  and  its  heavy  decline  in  1917.  Argentina  had  a 
somewhat  similar  fate,  while  Brazil,  with  coffee  and  manganese 


78  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

ore  for  return  cargo,  has  been  able  to  more  nearly  hold  her 
American  supply. 

The  two  facts  of  the  actual  blockades  of  war  and  the  pro- 
gressive blockades  of  ship  shortage,  make  it  clear  why  so  many 
parts  of  the  world  are  in  industrial  paralysis.  For  example, 
Russia  with  imports  of  $365,000,000  in  1914  imported  but  $200,- 
000,000  in  1917,  and  that  was  an  increase  over  1916.  But  even 
this  small  trade  was  chiefly  war  supplies  sent  in  by  her  allies,  for 
her  export  of  $349,000,000  in  1914  had  dropped  to  $40,000,000 
in  1915,  $53,000,000  in  1916,  and  but  $26,000,000  in  1917. 

Perhaps  the  best  known  and  most  conspicuous  example  of 
stagnation  is  afforded  by  the  Australian  wheat  situation,  where, 
according  to  unofficial  figures,  200,000,000  bushels  of  wheat  are 
piled  up  waiting  the  chance  for  shipment,  for  which  the  ever  de- 
clining tonnage  gives  small  promise  for  many  months  to  come. 
The  stock  of  wheat  exceeds  by  many  fold  all  ordinary  need  for 
warehouses  and  all  possibility  of  proper  storage.  It  is  said  to 
be  piled  up  more  than  10  miles  long  in  enclosures  made  by  walls 
of  sacked  wheat  10  to  20  feet  high  and  10  to  20  feet  wide.  This 
drew  mice,  which  have  multiplied,  and  in  spite  of  being  fought 
day  and  night  by  gangs  of  men  they  have  continued  to  multiply 
until  it  is  estimated  they  have  destroyed  40,000,000  bushels  of 
wheat.  They  increased  to  such  myriads  that  from  crowding,  a 
plague  of  soft  ringworm  fell  upon  them,  which  in  turn  was  caught 
by  the  men  who  fought  them,  and  became  a  plague  among  the 
people.^ 

The  export  of  Australian  coal  which  had  gone  in  hundreds  of 
thousands  of  tons  to  South  America  and  the  East  Indies,  is 
similarly  stopped,  with  shut-down  collieries  and  the  labor  unrest 
that  arises  from  unemployment. 

New  Zealand,  slightly  more  distant,  finds  that  the  paralysis  has 
affected  a  trade  so  valuable  and  so  vital  as  wool.  As  early  as 
March,  1916,  the  wool  sales  of  her  ports  had  been  postponed 
indefinitely  and  arrangements  were  being  considered  to  provide 
for  cash  advances  to  the  growers  similar  to  the  means  by  which 

'  Collier's  Weekly,  March  2,  1918.     Mark  Sullivan. 


^  J--     lyj      vv  /\K 


80  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

the  Australian  Government  had  made  cash  advances  to  the  wheat 
growers. 

In  Argentina,  a  country  with  a  trade  consisting  of  heavy  ex- 
ports of  wheat,  corn,  flax-seed,  and  meat,  imports  of  coal  and  the 
great  variety  of  manufactures  needed  in  a  modern  state,  the 
interference  with  trade  by  the  war  is  very  acutely  felt.  It  began 
early. 

Argentina  is  about  to  feel  the  effects  of  the  war  very 
seriously.  Imports  are  becoming  beautifully  less,  exports 
are  very  reduced  and  laborers  are  as  plentiful  as  leaves  in 
Vallombrosa,  with  labor  conspicuous  mainly  by  its  absence. 

Free  dinners  are  being  given,  and  it  is  very  disheartening 
to  see  hundreds  of  strong  and  able  men  waiting  listlessly  to 
be  fed. 

Work  in  the  port  is  very  scarce,  and  hundreds  of  steve- 
dores, lightermen,  sailors,  and  others  wander  about  with 
their  hands  in  their  pockets. 

Business  continues  at  a  complete  standstill,  and  all  stocks 
and  shares  are  either  unquotable  or  extremely  weak.^ 

Within  two  months  after  the  war  had  started  10  per  cent  of 
Buenos  Aires  clerks  had  been  dismissed  from  their  positions. 
By  September,  1917,"  the  vessel  arrivals  were  50  per  month  less 
than  in  normal  times.  Our  consul  reported,^  that  "  due  princi- 
pally to  lack  of  shipping  space,  the  exports  from  Argentina  for 
the  first  eight  months  of  the  year  were  considerably  smaller  than 
for  the  same  period  the  previous  year,  except  for  quebracho  logs, 
skins  and  hides,  butter,  wool,  tallow,  and  frozen  beef." 

January  to  August 

1917  1916 

Wheat    (tons)    765,919  1,597,578 

Maize  695,327  1,562,440 

Linseed    61,958  495,331 

Oats    231,697  573,221 

Quebracho  logs  75,799  74,779 

Butter    5,965  4,237 

Wool    95.840  82,772 

Frozen  beef  (quarters)   3,642,516  3,304,745 

\Fairplay,  October  1,  1914,  pp.  554-555. 

"  U.  S.  Commerce  Reports,  November  22,  1917,  p.  721. 

'  Ibid.,  October  22,  1917,  p.  290. 


TRADE    DISLOCATIONS    DUE    TO    WAR  81 

The  suffering  of  the  people  is  indicated  by  the  fact  that  the 
previous  winter  coal  from  the  United  States  had  paid  80s.  a  ton 
ocean  freight.  A  reduction  of  much  more  than  half  in  the  total 
coal  supply  shows  the  pinch  to  which  industry  was  put.  On 
May  20,  1918,  the  daily  press  reported  the  people  in  the  interior  • 
of  Argentina  burning  maize  in  the  place  of  coal  which  they  could 
not  get. 

From  the  Caribbean  comes  the  worldwide  plaint  of  hunger 

and  trade  stoppage. 

Central  America  can  not  supply  the  foods  which  we  com- 
monly think  of  as  necessities.  They  import  wheat,  corn  and 
beans,  and  are  suffering  from  lack  of  these  now. 

I  could  speak  of  cocoanuts  or  of  bananas,  thousands  of 
bunches  which,  being  perishable,  are  thrown  into  the  sea 
weekly,  because  there  are  no  ships  to  carry  them. 

There  are  natural  fruits  that  perish  by  the  millions  of 
bushels  and  could  be  fed  to  pigs— all  of  which  are  lost 
through  lack  of  organization.^ 

A  bulky  product  like  lumber  is  naturally  one  of  the  early  vic- 
tims of  declining  tonnage.  Months  ago  we  sent  regiments  of 
American  lumberjacks  fully  equipped  to  France  and  England,  to 
produce  in  Europe  what  we  could  not  ship  across  the  sea.  From, 
San  Francisco  came  the  complaint  more  than  a  year  ago,  of 
Mr.  J.  J.  Donovan,  President  of  the  Pacific  Logging  Congress : 

Because  we  have  few  suitable  ships  for  the  foreign  trade 
on  the  Pacific,  many  logging  camps  are  closed,  and  many 
mills  are  silent.  The  foreign  ships  on  which  we  depended, 
find  the  food  and  munition  trade  with  the  warring  nations 
so  remunerative  that  there  is  little  space  or  thought  of 
lumber,  except   for  military  purposes.' 

'  Cyrus  F  Wicker  of  N.  Y. :  Proceedings  of  American  Academy  of  Politi- 
"■'-'Ti  f.rsiictifn^mie'/eip'oJi  Zw  whf  .he  above  re,narl<s  were  made, 

?'*rn^H  Irnl   1^79  000  000  fe"    to  700,000,000.    From  the  Pacific  the  per- 
cema.e  ono's  ds'gr^^^^^^^^^^  718,000,000  to  322  000,000,  and  there  were 

fur  he?  dec  hies  in  1917.     A  heavy  Pacific  export  of  shooks  and  staves  fell 


82  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

The  traffic  of  the  Suez  Canal  is  a  suggestive  index  of  the  phght 
of  the  world's  trade.  In  1915  the  traffic  had  fallen  23.8  per  cent 
below  that  of  1913  which  was  slightly  above  20,000,000  net  tons. 
This  reduction  was  but  little  more  than  the  amount  of  German, 
Austrian,  and  Turkish  tonnage  passing  in  1913.  but  the  1917 
tonnage  of  8,300,000  tons  was  a  45  per  cent  drop  from  15,400,- 
000  tons  of  1915. 

Some  of  the  industrial  deadenings  due  to  the  war  must  con- 
tinue and  even  increase  until  the  war  is  over,  or  at  least  until 
shipping  increases,  while  others  are  temporary,  such,  for  example, 
as  that  of  the  Chilean  nitrate  business  which  declined  in  the  early 
part  of  the  war,  but  which  has  risen  to  greater  heights  than  ever 
as  the  increased  demand  for  material  for  explosives  has  sent  the 
ships  of  the  Allies  in  ever  increasing  numbers  to  the  nitrate 
ports.^ 

American  cotton  also  has  had  its  decline  and  recovery.  The 
temporary  paralysis  of  1914  and  1915  caused  the  price  to  go  to 
an  exceedingly  low  and  unprofitable  point,  which  upset  the  whole 
basis  of  industrial  life  in  the  cotton  belt,  and  created  depression, 
very  general  discontent,  and  some  anti-English  feeling.  It 
caused  the  national  agitation  and  campaign  that  every  man  should 
buy  a  bale  of  cotton,  the  President  himself  buying  one  to  set  the 
example.  This,  however,  has  long  since  passed  away,  but  the 
possibility  of  partial  return  is  indicated  by  the  shutting  down  of 
British  mills  in  the  spring  of  1918,  for  want  of  raw  cotton. 
However,  the  cotton  belt  is  now  safely  launched  upon  the  sub- 
stitute industry  of  raising  meat,  for  which  it  is  so  well  fitted,  and 
for  which  the  demand  is  so  unprecedented. 

Of  all  the  trade  disturbances  caused  by  the  war,  perhaps  the 
most  conspicuous  were  those  induced  by  the  cessation  of  the 
German  export  of   her  erstwhile   world   monopoly   supplies  of 

away  almost  completely;  the  Pacific  export  of  railroad  ties  dropped  from 
1,100.000  to  500,000  but  the  nearness  of  the  Atlantic  to  the  war  bases  in 
France  caused  the  Gulf  and  Atlantic  coasts  to  increase  their  shipment  of  this 
war  supply  threefold,  to  2,500,000  ties. 

'  Despite  heavy  shrinkage  in  other  parts  of  the  world,  Britain  increased 
her  entrances  from  Chile  from  150,000  to  350,000  tons,  while  the  movement 
to  the  United  States  increased  from  510,000  tons  in  1913  to  720,000  tons  in  the 
first  ten  months  of  1917. 


TRADE    DISLOCATIONS    DUE    TO    WAR 


83 


chemical  dyes  and  potash.  For  a  time  many  textile  manufac- 
turers refused  to  guarantee  their  colors,  and  England  and  the 
United  States  were  compelled  to  diligently  create  a  new  dye 
industry.  The  American  success  is  registered  '  by  the  increase 
in  our  export  of  American  made  dyestuff  from  $1,200,000  in  the 
first  seven  months  in  1915  to  $8,400,000  in  the  corresponding 
period  two  years  later.  Our  dyestuff  trade  to  France  jumped  in 
this  two  years  from  $250,000  to  more  than  $1,000,000;  to 
United  Kingdom,  from  $500,000  to  $2,000,000. 

With  potash  the  substitution  has  been  far  less  satisfactory. 
The  famine  still  continues  to  the  great  injury  of  potatoes  '  and 
many  other  crops  and  many  manufactures,  despite  the  fact  that 
we  have  busily  dredged  the  bottom  of  the  sea,  burrowed  in  the 
beds  of  Nevada  lakes,  tunneled  the  Utah  hills,  and  experimented 
in  many  laboratories. 

The  greatest  of  all  the  trade  disturbances  will  be  the  most 
ephemeral,  but  also  the  most  revolutionary  while  it  lasts:  namely, 
the  food  trade. 

The  World's  Food  Supply— A  Measure  of  War's  Trade 

Disturbances 

The  war  fell  upon  the  earth  in  a  way  to  embarrass  peculiarly 
the  international  trade  in  food,  and  the  Allies'  food  supply.  All 
the  West  European  Allies  are  heavy  food  importers  and  all  the 
W^est  European  neutrals  as  well,  for  food  importing  has  become 
the  habit  of  Western  Europe.  From  Norway  clear  around  to 
Greece,  inclusive,  no  country  produced  all  of  its  own  bread  or 
meat,  and  some  of  them,  especially  Britain,  Norway,  Sweden, 
and  Denmark,  were  almost  as  dependent  upon  outside  supplies 
as  New  England  itself;  France,  Spain,  Portugal,  and,  to  a  lesser 
extent  Germany,  were  also  food  importers.  Even  the  beasts  of 
all  these  countries  depended  to  some  extent  on  imported  food 

'  II   S   Covimerce  Reports.  October,  1917,  p.  271. 

=  Owing  to  he  importance  of  potash  as  a  fibre  strengthener  many  prom- 
ising potato  crops  of  1917  wihed  before  the  attacks  of  bhght  which  they 
would^have  withstood  if  adequately  fed  on  potash,  which  is  pecuharly  im- 
portant  to  this  crop. 


84  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

and  in  Holland  and  Scandinavia  they  depended  to  a  great  extent 
upon  oversea  supplies  of  cottonseed  meal,  oil-cake,  bran  and 
Indian  corn. 

There  were  six  sources  for  these  vital  import  supplies  of 
Western  Europe :  the  Baltic  Sea,  the  Black  Sea,  North  America, 
the  River  Plate,  India,  and  Australia.  The  Baltic  was  instantly 
closed  upon  the  declaration  of  war,  for  the  German  navy  made 
trade  with  Russia,  the  Baltic  grain  exporter,  impossible.  In  a 
short  time  the  entrance  of  Turkey  into  the  war  shut  off  the 
Black  Sea,  which,  as  the  outlet  of  Bulgaria,  Roumania,  and 
South  Russia,  was  the  greatest  wheat  exporting  district  of  the 
world.  This  threw  the  Allies  back  upon  the  grain  supply  of 
North  America,  the  River  Plate,  India,  and  Australia.  Of  these, 
the  last  two  were  relatively  unimportant,  and  the  United  States 
happened  for  two  years  to  have,  from  its  standpoint,  a  streak 
of  agricultural  good  luck,  which  has  probably  turned  out  to  be 
Allied  bad  luck,  for  it  kept  us  unduly  asleep. 

It  so  happened  that  in  1914  this  country,  which  had  had 
wheat  crops  averaging  705,000,000  bushels  in  the  three  pre- 
vious years,  had  the  biggest  crop  ever  recorded — 891,017,000 
bushels.  That  enabled  us  to  have  a  surplus  for  Europe  that 
season.  Also  Europe  had  a  fair  crop.  Then,  by  the  same  luck 
which  enables  a  gambler  occasionally  to  throw  two  double  sixes 
in  succession,  the  crop  of  1915  was  again  the  biggest  ever — 
1,011,505,000  bushels — and  we  shipped  to  the  Allies  a  total  of 
243,000,000  bushels.  The  1916  harvest  dropped  back  to  rather 
below  normal  size— 640,000,000  bushels;  in  1917  to  660,000,- 
000  bushels. 

The  phenomenally  big  crops  of  1914  and  1915  coming  as  they 
did  with  the  decline  in  shipping  let  a  smaller  tonnage  supply  the 
Allies,  because  the  wheat  was  unusually  nearby.  It  also  kept 
bread  price  down  and  served  to  prolong  our  dream  that  the  war 
was  3,000  miles  away,  and  hid  for  one  full  year  the  real  facts 
of  ship  shortage  and  food  shortage.  Then  the  normal  crop  of 
1916,  coming  with  the  increasing  ship  scarcity,  showed  that  for 
1917  the  usual  supplies  could  not  be  drawn  from  India,  Argen- 


TRADE   DISLOCATIONS    DUE    TO    WAR  85 

tina,  and  Australia  because  of  the  absolute  scarcity  of  tonnage. 
.\nd  we  had  slept  one  year  too  long,  postponing  cruelly  the  be- 
ginning of  a  policy  of  shipbuilding. 

In  the  meantime  the  needs  of  Western  Europe  were  becoming 
yet  greater  and  greater,  because  the  home  supply  was  failing,  due 
to  the  shortage  of  man  power,  beast  power,  and  fertilizer.^  Now 
we  come  into  the  dreadful  year  of  1918  in  which  America,  be- 
lated duplicator  of  the  experience  of  her  allies,  promises  a 
reduced  supply  of  agricultural  produce  because  of  labor  shortage 
and  fertilizer  shortage. 

The  measure  of  this  pinching  of  the  world's  trade  is  found  in 
the  rationing  of  the  people  of  Belgium  and  France  to  rations 
reduced  to  the  point  where  their  inadequacy  is  shown  by  the 
spread  of  tuberculosis — a  hunger  disease.  In  England  also  the 
food  shortage  has  become  almost  as  bad  and  America  is  in  a 
condition  that  may  well  be  said  to  be  partial  informal  rationing. 

The  Dislocation  of  Trade 

In  addition  to  trade  destruction,  there  is  an  enorrtious  amount 
of  trade  dislocation.  Great  efforts  are  being  made  to  cut  out 
waste  motion  and  shorten  distance  in  the  handling  of  the  small 
quantities  .of  goods  with  which  the  world  must  content  itself. 
As  a  result  we  are  learning  two  things — to  get  along  without,  and 
to  go  the  short  route  with  what  we  have.  The  world's  trade  is 
being  partly  rerouted. 

Rerouting  of  Trade 

When  shipping  revived  in  the  autumn  of  1914  there  was  a 
temporary  paralysis  in  many  localities  due  to  the  disappearance 
of  German  ships  and  German  trade.  Mediterranean  trade  which 
had  been  carried  to  the  United  States  by  German  vessels,  was 
transshipped  for  a  time  at  Liverpool.  Then  the  Cunard  line  put 
on  new  direct  service  from  the  United  States  to  Greece,  and  the 

'  In  1912  we  sent  1.100,000  tons  of  fertilizer  to  Europe.  In  1916  we  sent 
44,000  tons  and  in  1917  our  total  exports  were  less  than  the  year  before. 


86  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Italian  Government  aided  new  Italian  lines  direct  to  the  United 
States  to  replace  the  German  lines.  New  lines  went  from  Amer- 
ica to  Scandinavia,  but  next  to  the  supply  of  ships  to  the  scene  of 
war  itself,  the  greatest  single  rearrangement  was  the  trade  of 
Archangel,  the  only  European  outlet  for  over  100,000,000  people 
engaged  in  war.  Despite  its  limited  connection  with  the  rest  of 
Russia  through  a  single  track  narrow  gauge  railway,  so  much 
traffic  was  thrown  there  that  in  the  summer  of  1915  it  was  a  port 
in  rank  second  only  to  New  York  in  number  of  vessels  arriving 
and  clearing.^ 

Russia  made  a  further  attempt  at  outlet  by  promptly  establish- 
ing new  steamship  lines  from  Vladivostok  across  the  Pacific  to 
Seattle  and  British  Columbia,  which  of  course  meant  longer  voy- 
ages and  more  shipping  to  render  the  same  service  that  had  pre- 
viously been  rendered  by  the  short  voyage  from  Baltic  ports  to 
Britain.  It  also  meant  partial  transfer  of  sources  of  Russian 
supplies  from  Britain  to  United  States. 

Reduction  of  Entrepot  Trade 

The  elimination  of  the  entrepot  trade,  so  far  as  possible,  is 
one  conspicuous  feature  of  the  trade  dislocation.  In  times  of 
peace  a  surprising  proportion  of  the  world  traffic  was  trans- 
shipped at  some  convenient  port  which  held  this  business  for  the 
double  reason  of  excellent  shipping  connections  and  the  estab- 
lished force  of  market.  For  example,  large  quantities  of  Aus- 
tralian wool  were  shipped  to  the  United  States  by  way  of  London, 
for,  despite  the  fact  that  there  were  direct  vessels  going  between 
the  United  States  and  Australia,  the  London  wool  auctions  served 
as  magnets  to  keep  the  business  moving  by  the  old  and  more  cir- 
cuitous channels.  Liverpool  was  a  great  transshipping  port  for 
American  cotton,  likewise  Bremen.  American  tobacco  was  trans- 
shipped all  over  North  Europe  from  Bremen,  Dutch  colonial 
produce  from  Amsterdam,  African  produce  from  Antwerp,  and 
so  on.     The  list  might  be  extended  to  greater  length.     Now  the 

'  Marine  Review,  May,  1916,  p.  171. 


TRADE   DISLOCATIONS    DUE    TO    WAR 


87 


triple  pressure  of  actual  blockade,  ship  shortage,  and  govern- 
mental interference,  is  rapidly  doing  away  with  this.     Of  course 
Bremen's  tobacco  and  cotton  business  is  gone  perforce,  for  the 
time  being  at  least,  and  Haiti,'  which  had  previously  sent  her 
tobacco  to  Holland  via  Bremen,  now  sends  it  to  Amsterdam 
direct.      In   1915    a   Dutch   cotton   association   was    formed   in 
Rotterdam-   to  handle  cotton   which  had  previously  come   by 
Bremen,  and  large  fire-proof  warehouses  were  built  to  handle 
it.     The  congestion  of  the  Italian  port  of  Genoa  ^  in  1915  was 
partly  due  to  the  sudden  rise  of  a  wool  import  business  direct 
from  the  River  Plate.     Before  the  war  Argentine  wool  came  to 
Italy  through  France  and  Antwerp,  cleaned  and  ready  for  spin- 
ning.    This  business  was  absolutely  ended  by  the  war  and  Genoa 
had  to  erect  wool  cleaning  and  washing  works  to  handle  the 
direct  importations. 

Much  Dutch  East  Indian  produce,  coffee,  rubber,  tobacco,  etc., 
previously  shipped  to  the  United  States  via  Amsterdam,  is 
reported  shipped  direct.*  In  this  case  ship  shortage  is  assisted 
by  the  restrictions  which  the  Entente  Powers  have  placed  on 
Dutch  imports  for  fear  of  ultimate  transshipment  to  Germany. 
England,  however,  lacks  this  factor,  so  that  a  recent  order. 
November  21,  1917,'  shows  the  extremity  to  which  the  world  is 
brought;  for  this  order  is  a  deliberate  annihilation,  for  the  pres- 
ent at  least,  of  one  of  the  most  precious  commercial  treasures  of 
the  British  Empire— London's  entrepot  trade.  For  generations 
London  has  busied  and  fattened  herself  as  a  rehandler  of  inter- 
national trade,  the  world's  greatest  entrepot,*^  and  now  comes  a 

'  U.  S.  Commerce  Reports.  October  30,  1917,  P-  401. 
"-  The  Economic  World.  February  10,  1917,  p.  211. 
'F airplay,  January  3,  1916,  p.  72^ 
4  U.  S.  Commerce  Reports,  October  3,  1917,  p.  lyu. 

"Mr.'j  a^Broadbank.  chairman  of  the  Docks  Committee  of  the  Port  of 
London  Authority,  said  at  the  beginning  of  the  war : 

"London  is  the  preeminent  entrepot  port  pf  the  world,  and  has  been  so 
since  the  destruction  of  Antwerp  by  the  Spaniards  m  1576. 

The  value  of  this  class  of  trade  can  not  be  overemphasized.     It  gives  tar 

more  employment  to  labor  than  trausit  business:  large  sums  are  paid  to  the 

warehouse  keepers   for  rent.     Banking  and  insurance  business    follows.      A 

mutiUide  of  pay  ng  guests  in  the  form  of  buyers  is  brought  into  the  city^ 

.It  could  be  argued  with  some  plausibility  that  the  chief  factor  which 


88  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

British  order  that  no  goods  for  France  may  be  sent  via  England. 
Referring  to  the  difficulties  of  any  reexportation,  f airplay  com- 
plains editorially,  December  21,  1910: 

Further,  in  the  case  of  coffee  and  of  some  sorts  of  spices 
which  are  not  consumed  to  any  extent  in  England,  the  un- 
fortunate merchant,  who  had  been  asked  to  continue  export 
trade,  is  now  saddled  with  a  burden  which  he  has  himself 
financed,  and  which  he  will  not  be  able  to  unload  until  the 
return  of  peace  enables  him  to  resume  his  usual  vocation; 
which  is  a  position  at  which  even  the  selfishness  of  a  red- 
tape  worm  would,  I  should  think,  gird. 

Changes  in  the  Source  of  Supply 

This  class  of  dislocation  has  been  worldwide,  with  innumerable 
examples  arising  from  the  combined  influence  of  the  blockade, 
the  difficulties  of  transport  for  the  finished  produce,  inability  to 
secure  raw  material,  or  inability  to  make  the  goods  themselves 
because  of  pressure  of  war  work.  The  following  are  some  typi- 
cal examples  of  this  type  of  trade  changes. 

has  made  London  has  been  the  carrying  on  of  its  huge  entrepot  trade  during 
the  last  300  years. 

Today  there  are  600,000  tons  of  goods  in  the  warehouses  of  the  Port 
Authority,  and  when  the  stocks  at  the  other  pubHc  warehouses  are  added,  we 
can  reckon  on  1,000,000  tons  of  goods  being  in  the  port.  This,  of  course, 
altogether  leaves  out  of  account  the  stocks  of  dealers  or  shopkeepers. 

Just  as  every  class  of  manufactured  article  can  be  obtained  at  the  West 
End  stores,  so  the  great  wholesale  markets  on  the  eastern  side  of  London 
offer  the  world"  the  choice  of  the  products  of  the  world  in  bulk — wool, 
timber,  tea,  rubber,  tobacco,  sugar,  coffee,  cocoa,  spices,  wine,  brandy,  rum, 
metals,  ivory,  ostrich  feathers,  drugs. 

Wool  represents  the  largest  value  of  the  importations  into  London,  and  it 
affords  one  of  the  most  striking  examples  of  the  entrepot  trade.  Of  the 
25,000,000  pounds  of  wool  coming  into  London  every  year,  practically  none 
remains  in  London.  About  two-fifths  is  purchased  by  foreign  buyers ;  the 
rest  goes  to  the  manufacturing  districts  of  our  own  country.  The  wool  is 
brought  to  London  merely  to  be  sold.  The  same  fact  largely  applies  to  the 
other  goods. 

Ivory  may  also  be  mentioned  as  an  instance  of  the  magnetic  power  of  the 
London  market.  If  you  go  into  the  ivory  showroom  of  the  London  dock, 
you  will  always  see  some  barrels  of  small  pieces  of  ivory  from  America. 
These  pieces  are  the  discarded  shavings  of  tusks  originally  sold  in  London 
to  American  buyers.  The  shavings  are  sent  here  for  sale  from  America,  and 
it  may  well  happen  that  some  of  them  will  be  purchased  by  Americans  for 
pianoforte  keys  or  backs  of  brushes,  and  so  have  a  third  voyage  across  the 
Atlantic  before  being  finally  used."     Lloyd's  Weekly,  October  2,  1914,  p.  629. 


TRADE    DISLOCATIONS    DUE    TO    WAR  89 

Long  rivalry  in  the  Argentine  between  the  American  and 
British  meat  companies  ended  in  September,  1914,  by  the  ship- 
ments from  Argentina  ^  to  America  being  consigned  to  the 
American  rather  than  the  British  companies. 

The  closing  of  the  Baltic  whence  British  collieries  had  for 
years  drawn  their  supplies  of  mine  props,  sent  a  deputation  of 
timber  m»n  to  Newfoundland  prospecting  for  new  supplies  in 
September,  1914.- 

In  December,  1914,^  the  importers  of  the  Belgian  Congo 
turned  to  America  for  the  supplies  which  had  previously  come 
from  Europe  via  steamer  lines  that  were  then  thoroughly  dis- 
organized.    America  is  still  feeding  West  Africa  direct. 

The  Spanish  fig  export  jumped  from  2,000  tons  in  1914  to 
15,000  in  1915,  because  of  the  disturbance  of  the  Turkish 
(Smyrna),  Greek,  and  Italian  trade  in  this  product.* 

From  the  province  of  Amoy,  China,  comes  the  report  ^  that 
the  indigo  industry  which  had  been  almost  killed  out  during  the 
last  twenty-five  years  by  the  import  of  German  aniline  dyes,  has, 
by  the  shutting  off  of  this  trade,  been  restored  to  the  point  of 
again  supplying  the  local  needs. 

Our  consul  reports  ^  that  in  Sumatra  many  articles  previously 
supplied  from  Europe  now  come  from  America,  such  as  auto- 
mobiles, patent  medicines,  chemicals,  toilet  articles,  household 
goods,  etc. 

The  drug  imports  of  Paraguay  '  show  that  the  supply  of  drugs 
from  Germany  had  disappeared,  from  France  they  had  shrunk 
to  one-fifth,  and  from  Britain  to  one-half  their  former  import- 
ance, while  the  supply  from  the  United  States  had  much  more 
than  doubled. 

A  book  might  be  filled  with  similar  examples  of  small  local 
trade   dislocations.      More   important,  however,   are  the  larger 

'  Fairplav.  October  8.  1914,  p.  588. 

=  Ibid..  September  24,  1914,  p.  503. 

'  U.  S.  Commerce  Reports,  December  7,  1914,  p.  1041. 

*  Ibid.,  October  18,  1917,  p.  253. 

"Ibid.,  January  2,  1918,  p.  3. 

Ubid.,  January  10,  1918,  p.  119. 

'Ibid.,  January  10,  1918,  p.  125. 


90  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

movements.  Among  these,  three  are  particularly  conspicuous: 
(1)  the  decline  in  European  exports;  (2)  the  corresponding  rise 
in  the  trade  of  Japan;  and  (3)  of  the  United  States. 

Decline  of  European  Exports 

The  most  pronounced  characteristic  of  European  trade  has 
been  declining  exports,  and  because  of  loans  abroad,  the  ever- 
increasing  imports.  Amidst  the  general  decline  of  exports  there 
has  been  a  surprising  continuance  of  the  British  export  of  cotton 
manufactures.  An  examination  of  the  economics  of  this  in- 
dustry shows  good  reasons  why  it  should  persist  far  into  the 
struggle.  The  raw  material  takes  up  small  bulk  in  proportion  to 
its  value.  The  finished  product  takes  up  little  space  and  so  long 
as  Britain  can  import  food  or  any  raw  materials,  she  has  abun- 
dant space  going  outwards.  The  cotton  industry,  unlike  iron 
and  steel,  is  one  in  which  women  can  do  the  preponderance  of 
the  work.  We  find  that  between  1913  and  191 G  Britain  actually 
held  and  substantially  increased  her  cotton  cloth  export  (quan- 
tities) to  South  America,  the  United  States,  Egypt,  and  other 
Mediterranean  countries.  Beyond  Suez  the  competition  of  Japan 
and  the  pinch  of  high  prices  on  poor  purchasers,  made  themselves 
manifest  by  a  decline  of  one-third  (a  billion  yards)  to  the  British 
Indies ;  that  to  China  fell  from  570,000,000  to  370,000,000  yards; 
to  Japan  from  50,000,000  to  16,000,000;  with  a  one-fifth  decline 
in  the  Dutch  East  Indies. 

Japan  Gains  in  Trade 

To  date  Japan  has  kept  out  of  the  Allies'  ship  pool  that  her 
ships  may  serve  herself.  Strenuously  has  she  striven  in  trade 
bargains  to  get  heavy  supplies  of  raw  material,  particularly  steel 
to  build  ships  for  herself.  So  diligently  has  she  manufactured 
that  her  imports  of  raw  material,  especially  cotton  and  steel,  have 
exceeded  all  precedent,  and  the  busyness  of  the  western  world 
has  given  her  a  chance  to  establish  many  a  trade  which  she  will 
strive  to  hold.     Her  cotton  blankets  are  gladly  taken  by  South 


TRADE    DISLOCATIONS    DUE    TO    WAR  91 

Africa  and  Australia,  and  hosiery  which  she  has  previously  sent 
only  to  Asia,  is  now  sent  to  Australia,  South  Africa,  and  even  to 
Holland  and  England/  A  measure  of  these  trade  gains  is  a 
fivefold  increase  of  Japanese  cottons  to  New  Zealand  between 
1914  and  191G,  while  the  more  important  supply  from  the  mother 
country  had  less  than  doubled  in  value." 

In  the  Foochow  district  of  China  ^  where  the  British  had  a 
monopoly  on  piece  goods  trade  before  the  war,  the  Japanese  had 
in  three  years  with  diligent  work,  succeeded  in  getting  TO  per 
cent  of  it. 

Japanese  cotton  spinning  was  the  most  prosperous  industry  of 
the  Empire  in  1917,  paying  about  60  per  cent  dividends  and  being 
slightly  ahead  of  the  manufactures  of  chemicals.*  Hong  Kong, 
long  a  heavy  flour  importer  from  the  United  States,  is  experi- 
encing a  change  of  diet  because  it  is  now  being  supplied  with 
Japanese  flour  made  of  Manchurian  wheat  and  brought  down  the 
coast  in  Japanese  steamers.^  The  Japanese  newspapers  announce 
that  this  change  has  come  to  stay. 

More  interesting  and  more  suggestive  is  the  way  Japan  has 
seized  the  Austrian  trade  in  pencils,  by  supplying  us  3  to  5  per 
cent  of  our  import  in  191G,  and  50  to  60  per  cent  in  1917;  and 
the  German  trade  in  toys,  of  which  the  oriental  copyist  supplied 
90  per  cent  of  our  1917  imports  of  nearly  $2,000,000. 

The  shortage  of  British  steamers  in  Eastern  seas  is  resulting 
in  an  increasing  service  by  Japanese  steamers  in  the  Indian  coast 
trade,  as  well  as  an  increased  Japanese  share  in  the  trade  itself.^ 

The  figures  of  Japanese  trade,  imports  and  exports,  from  1913 
to  1917,  are  startling,  even  when  allowance  is  made  for  the 
rise  in  prices.  The  shrinkage  in  her  imports  of  manufactures,. 
coupled  with  enormous  increases  of  raw  and  partly  manufactured 
goods,  and  the  decline  in  food  imports,  show  she  is  developing 

'  U.  S.  Commerce  Reports,  October  17,  1917,  p.  226. 
"'Ibid.,  October  25.  1917,  p.  341. 
'Ibid.,  November  9,  1917. 
■   *  Report  of  Consul  General   Scidmore,  Official  Bulletin,  January  31,   1918, 
p.  1. 

''  U.  S.  Commerce  Reports,  November  5,  1917,  p.  487. 
"  Fairplay,  December  28,  1916,  p.  1012. 


92  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

her  colonial  empire  for  food  and  capturing  foreign  markets  with 
her  manufactures,  which  show  in  1917  more  than  threefold  the 
figures  of  1913.  During  this  period  her  total  exports  sharing  the 
conditions  of  the  United  States  have  gone  from  $300,000,000 
to  $800,000,000. 

TRADE  CHANGES— INCREASED  FOREIGN  TRADE  OF  JAPAN  ' 

Imports 

1913  1914  1915  1916  1917 
Foods,  beverages, 
tobacco 
Unmanuf'd  .  .$  38,613,000$  25,981.000$    9,974,000$    7,315,000$  10,112,000 

Prepared    ...     21,498,000  13,271,000  9,040,000  8,362,000  8,255,000 

Raw  materials  . . .   176,241,000  163,877,000  169,408,000  215,304,000  281,458,000 

Partly  iiianuf  d  . .     63,273,000  47,982,000  49,041,000  100,478,000  160,770,000 

Whoflv  manuf'd  .     61,828,000  43,494,000  25,659,000  42,373,000  51,688,000 

Miscel'laneous    ...       2,169,000  2,369,000  2,304,000  3,247,000  4,060,000 

Total   $363,622,000  $296,974,000  $265,426,000  $377,079,000  $516,343,000 

Exports 

1913  1914  1915  1916  1917 
Foods,  beverages, 
tobacco 
Unmanuf'd  ..$  12,290,000$  13,013,000$  18,661,000$  23,597,000$  36,639,000 

Prepared  ....     18,688,000  18,653.000  21,277,000  28,524,000  49,197,000 

Raw  materials  . . .     25,593,000  22,678,000  22,643,000  29,418,000  40,620.000 

Partly  manuf'd    .   163,540,000  152,720,000  161,216,000  269,651,000  361,700,000 

Wholly  manuf'd  .     92,180,000  83,693,000  21,069,000  189,791,000  293,195,000 

Miscellaneous   ...       2,980,000  3,907,000  8,225,000  21,062,000  17,747,000 


Total   $315,271,000  $294,664,000  $353,091,000  $562,043,000  $799,098,000 

American  Trade 

Since  1914  the  United  States  has  found  herself  to  be  what 
England  has  often  called  herself  during  the  past  century — 
namely,  the  workshop  of  the  world.  In  the  first  months  of  the 
war,  steamships  and  cables  could  not  work  fast  enough  at  placing 
contracts  for  guns  and  shells,  motor  trucks,  barbed  wire,  and 
explosives  in  the  United  States.  Then  came  the  rush  on  our 
shipyards  with  ships  for  European  owners.  Then  the  demand 
for  food,  of  which  we  shipped  enough  for  the  complete  rationing 
of  16,314,000  men  on  the  average  for  the  whole  period,  July  1, 

^  U.  S.  Commerce  Reports,  February  19,  1918,  p.  665. 


TRADE    DISLOCATIONS    DUE    TO    WAR  93 

1914,  to  January  1,  1918,  and  in  addition  enough  protein  to  feed 
22,000,000  men. 

The  trade  balance  of  the  United  States  during  this  period  has 
attained  a  condition  never  before  witnessed  in  the  history  of  the 
world's  trade,  and  we  may  hope  never  again  to  be  duplicated,  for 
it  is  the  sign  of  woe.  Before  we  entered  the  war,  Europe  was 
supplying  itself  and  feeding  itself  not  by  trade,  but  in  promises 
to  trade,  namely,  bonds,  which  are  promises  to  send  money 
(really  goods)  at  some  future  time.  Then  when  the  borrowing 
capacity  of  the  nations  dealing  with  American  individuals  was 
about  exhausted,  we  entered  the  war,  floated  our  own  loans,  and, 
as  a  government,  advanced  the  money  to  Europe  (more  than 
$2,000,000,000  in  the  first  six  months  of  the  war)  thus  permit- 
ting a  continuation  of  this  astonishingly  unbalanced  trade,  as 
evidenced  by  our  total  exports  during  the  calendar  year  1917  of 
$6,200,000,000,  and  total  imports  of  less  than  $3,000,000,000, 

U.  S.  TRADE  BALANCE,  1917,  CALENDAR 

(In  Millions  of  Dollars) 

Imports  Exports                                           Imports  Exports 

Europe   551.1  4,054.3  Sweden    18.0  20.9 

Asia 758.2  431.1  Norway    6.2  62.8 

Africa 73.0  51.4  Canada  413.6  829.9 

Oceania    99.2  117.1  Argentina     178.2  107.6 

N.America 871.9  1,264.6  Brazil    145.2  66.2 

S.  America  598.8  312.4  Chile   142.5  57.4 

,  China    125.1  40.2 

U.  K ...  280.0  2,001.0  Japan    253.6  186.3 

France    98.6  940.8  Australia  &  N.  Z.  .       32.0  76.9 

Italy    36.4  419.0                                             

Russia  in  Europe..  12.3  314.6  Total 2,952.4  6,231.2 

Netherlands    22.7  90.5 

The  figures  to  Europe  as  a  whole,  $4,000,000,000  exports,  and 
less  than  one-seventh  as  much  imports  from  Europe,  are  indeed 
startling.  The  examination  of  the  figures  with  the  principal 
belligerents,  Britain,  France,  Italy  and  Russia,  shows  how  our 
trade  consists  virtually  of  a  hand-out  of  goods  without  return  in 
kind  at  the  time. 

The  trade  with  Canada,  equally  at  war,  partakes  of  the  nature 
of  the  European  combatants,  while  from  South  America  and  Asia 


94  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

we  are  getting  a  surplus  of  imports  to  partially,  but  only  to  a 
very  small  degree,  square  the  account. 

Comparison  of  191G  with  1917  shows  that  these  tendencies  of 
enormous  export  of  American  produce  were  steadily  increasing, 
at  least  on  the  value  basis.  The  figures  of  import  of  raw  ma- 
terials give  a  good  measure  of  the  manufacturing  effort  that  the 
United  States  is  making.  Right  down  the  column  are  heavy  in- 
creases in  hides,  rubber,  wool,  oil,  and  especially  in  the  more 
valuable  ores  where  the  jump  in  manganese  of  more  than  100 
per  cent  in  the  three  years  of  the  war  shows  how  our  steel  in- 
dustry has  been  called  upon  for  high-grade  products.  In  the 
bulky  iron  ore,  ordinarily  secured  largely  from  Europe,  we  see 
a  heavy  decline  (a  million  tons)  which  we  can  fortunately  replace 
at  home. 

U.  S.  IMPORTS  CRUDE,  1914-1917,  FISCAL  ' 

Quantity  (000  omitted)  Value  (000  omitted) 

1914  '  1917  1914  1917 

Hides,  lbs 561,070  700,207  $120,289  $216,363 

India  rubber,  lbs 131.995  333,373  71.219  189,328 

Silk,  raw,  lbs 28,594  33,868  97,828  156,085 

Wool,  unmanufactured,  lbs.  .  247,648  372,372  53.190  137,137 

Cotton,  raw,  lbs 123,346  147,061  19.456  40,429 

Flaxseed,  bu 8.653  12.393  10,571  25.149 

Mineral  oils,  gal 773,052  1.034.590  11,776  14.109 

Leaf  tobacco,  lbs 60.107  46.136  35.029  25.481 

iron  ore.  tons   2.167  1,149  3,986  6.984 

Manganese,  tons   288,706  656,088  1,841  10,545 

Total  value  for  1914,  $632,865,860;  1917,  $1,109,655,040. 

In  addition  to  becoming  the  workshop  of  the  world,  the  United 
States  has  also  been  called  on  to  return  two  decades  in  its  indus- 
trial history  and  become  the  provisioner  of  the  world.  Despite 
the  fact  that  our  export  of  foods  has  been  rapidly  declining  for 
tw'enty  years  and  had  in  some  lines  approached  the  vanishing 
point,  we  suddenly  found  ourselves  the  only  nation  in  a  position 
to  send  food.  With  exports  of  fresh  beef  and  veal  that  had  de- 
clined to  6,000,000  pounds  in  1914,  and  which  were  returned 
twentyfold  in  imports  from  the  Argentine,  Uruguay,  Australia, 

'  Official  Bulletin,  October  24,  1917. 


TRADE    DISLOCATIONS    DUE    TO    WAR  95 

New  Zealand,  and  Canada,  we  suddenly  increased  it  to  170,- 
000,000  pounds  in  1915,  231,000,000  in  1916,  and  215,000,000 
in  1917  (calendar).  Meanwhile  the  bacon  and  ham  exports  had 
jumped  from  350,000,000  pounds  to  over  800,000,000. 

Our  wheat  export  which  averaged  40,000,000  bushels  in  three 
prewar  years,  went  up  to  259,000,000  in  1915,  173,000,000  in 
1916,  and,  alas,  down  to  106,000,000  in  1917  (calendar). 
Butter,  in  which  we  had  been  an  inconspicuous  figure  with 
4,000,000  pounds  export  for  three  years  before  the  war,  went  up 
to  26,000,000;  cheese  from  3,700,000  to  66,000,000;  condensed 
milk  from  17,000,000  to  259,000,000  pounds,  and  as  is  well 
known  the  call  for  food  is  becoming  ever  louder. 

We  have,  however,  recouped  ourselves  to  some  extent,  and 
with  our  war  prosperity,  kept  up  the  flavor  of  our  eating  by 
maintaining  our  imports  of  coffee,  teas,  and  spices,  and  substan- 
tially increased  our  imports  of  cocoanuts  and  crude  cocoa  (179,- 
000,000  pounds  in  1914,  367,000,000  in  1917). 

The  decline  in  the  imports  of  some  luxuries  is  a  measure  alike 
of  European  inability  to  produce,  and,  since  we  have  got  into  the 
war  bond  buying  business,  of  our  own  inability  to  buy  this  kind 
of  entirely  non-essential  commodities;  for  example,  our  consul 
general  at  Paris  reports  for  the  first  nine  months  of  1917  ^  the 
falling  ofif  of  exports  to  this  country  through  Paris  from  $42,- 
000,000  to  $35,000,000,  decreases  being  chiefly  precious  stones, 
pearls,  silk  manufactures,  champagne,  feathers,  cotton  manu- 
factures. 

Similarly,  during  the  year  1917  the  consul  at  St.  Gall,  Switzer- 
land, says  that  the  small  shipments  of  cotton  embroideries  and 
laces  are  responsible  for  a  decline  in  trade  from  $7,500,000  to 
less  than  $4,000,000." 

The  ivory  and  ostrich  feather  market  of  London  had  reached 
an  unprosperous  condition  as  early  as  the  middle  of  1916.^ 

'  U.  S.  Commerce  Reports,  October  13,  1917,  p.  177. 

-  Ibid.,  February  8,  1918,  p.  516. 

'  Fairplay,  December  21,  1916,  p.  955. 


96         .influence  of  the  great  war  upon  shipping 

Military  Domination  of  Economic  Life 

The  year  1918,  granted  a  continuance  of  the  war  in  full  vigor, 
will  show  more  changes  than  any  single  year  during  the  war,  for 
the  reason  that  the  whole  basis  of  trade  is  changed.  Normal 
trade  is  controlled  by  competition  and  the  desire  for  gain.  This  is 
now  eliminated.  Now  all  governments  are  controlling  com- 
merce with  ever  increasing  disregard  of  individual  preferences 
and  profits  as  national  need,  ship  shortage,  and  war  stress  make 
need  rise  higher  and  higher,  thus  pushing  national  control  to 
severities  previously  undreamed. 

Government  regulation  of  trade  has  been  the  bugbear  of  Anglo- 
Saxons  in  the  recent  decades  of  peace,  but  now  it  has  become  a 
Cyclops  in  this  time  of  war,  holding  trade  in  an  all  inclusive  and 
entirely  relentless  grip.  As  the  government  conscripts  the  sol- 
diers, so  it  conscripts  trade  in  the  dual  attempt  to  prevent  trading 
with  the  enemy  and,  with  lessened  resources,  to  produce  increase 
of  economic  efficiency  at  home,  in  Allied  lands,  and  on  the  battle 
front. 

Trading  uuith  the  Enemy 

Human  nature  is  much  too  weak  to  resist  the  temptation  of 
war  profits  even  by  selling  to  the  enemy,  and  governments  have 
ample  provocation  for  all  the  restrictions  they  have  taken.  Some- 
times the  trader  had  some  excuse.  Sometimes  he  had  none. 
Thus,  the  Scandinavian  market  has  been  partly  supplied  with  Ger- 
man goods  and  the  American  and  British  trader  could  properly 
wonder  if  the  great  increases  of  Scandinavian  trade  were  not  re- 
placing German  supplies  for  Scandinavia  rather  than  going  on  to 
Germany.  There  was,  however,  no  question  about  the  results  of 
the  reported  export  of  coal  at  $40  a  ton  from  New  York  to 
supply  German  cruisers  that  were  destroying  American  and 
British  trade  in  the  South  Atlantic  in  the  early  part  of  the  war.^ 
Even  clearer  is  the  example  of  the  German  firms  in  Chile  and 

'  Fairplay,  October  22,  1914,  p.  642. 


TRADE    DISLOCATIONS    DUE    TO    WAR  97 

Argentina  who,  with  good  profit  to  themselves,  consigned  to 
America  cargoes  of  hides  and  nitrate  to  be  made  into  the  war 
suppHes  for  which  in  the  early  years  of  the  war  Germany  so 
bitterly  denounced  America. 


The  British  Blockade 

England  early  commenced  the  dual  policy  of  controlling  her 
trade  to  strengthen  herself  and  weaken  her  enemies  by  blockade. 
Within  two  weeks  after  the  war  started,  she  prohibited  the 
export  of  practically  all  kinds  of  foods  and  began  her  policy  of 
holding  up  cargoes  bound  to  Germany  or  to  neutral  countries 
adjacent  to  Germany.  Thus  ships  to  the  Mediterranean  were 
searched  at  Gibraltar  for  contraband,  and  a  two  weeks  delay  for 
an  American  steamer  while  hundreds  of  tons  of  copper  were 
being  taken  from  her  was  a  common  occurrence.^  The  list  of 
contraband  articles  was  constantly  being  changed  as  the  economic 
concept  of  the  war  grew.  Control  of  neutral  trade  was  also  in- 
fluenced to  a  considerable  extent  by  the  fear  of  too  great  resent- 
ment in  foreign  countries.  Thus  for  a  time  the  cotton  blockade 
helped  to  cause  such  low  prices  of  cotton  and  such  industrial 
depression  that  our  whole  South  was,  generally  speaking,  resent- 
ful toward  the  Allies.  For  this  reason  and  for  the  lack  of  full 
appreciation  of  the  war  value  of  cotton,  Britain  permitted  it  to 
go  to  Germany  for  a  time  early  in  1915  when  more  than  a 
quarter  of  a  million  bales  were  sent  from  this  country  direct  to 
Germany.-  If  the  Germans  had  been  in  the  English  position, 
they  would  have  bought  that  cotton  and  stored  it — in  Bucking- 
ham Palace  if  necessary. 

Despite  Britain's  complete  supremacy  of  the  sea,  the  interna- 
tional difficulties  and  the  international  law  with  regard  to  what 
was  contraband  caused  her  blockade  policy  to  be  quite  ineffective 
because  of  the  large  amounts  of  trade  that  went  through  neu- 

•  U.  S.  Consular  Reports,  October  26,  1914.  p.  1310. 

-  Another  British  decision,  since  probably  repented,  was  the  refusal  to  buy 
sugar  that  came  from  Germany  for  fear  of  strengthening  Germany,  and 
the  purchase  by  the  government  of  distant  supplies  instead. 


98  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

trals.  Mr.  de  Tankerville,  editor  of  the  Nautical  Gazette,  writ- 
ing in  June,  1917,  says  : 

It  is  no  secret  now  that  the  foundations  of  many  a  for- 
tune in  the  new  era  of  shipping  were  made  carrying  cargoes 
to  ports  in  Italy,  Spain,  Portugal,  Holland,  Sweden,  and 
Norway,  which  eventually  found  their  way  to  Germany.^ 

The  resentment  of  the  American  people  at  having  their  trade 
stopped  and  the  protests  of  the  American  Government  on  this 
subject  caused  so  much  more  favorable  treatment  for  our  vessels, 
that  they  were  at  a  premium. 

American  ships  were  favored  by  underwriters  in  the 
matter  of  insurance  against  the  risk  of  detention  and  cap- 
ture and  American  ships  were  able  to  command  better  rates 
in  the  charter  market.  Soon  merchants  engaged  in  this 
lucrative  traffic  began  to  scour  American  ports  for  coasting 
steamers  able  to  undertake  voyages  across  the  Atlantic,  and 
thus  for  the  first  time  in  a  generation  the  American  flag  was 
restored  to  a  conspicuous  position  on  the  transatlantic  sea 
route. ■ 

Some  measure  of  Britain's  failure  early  in  the  war  to  check 
trade  to  Germany  was  shown  by  the  enormous  increase  of  trade 
to  Genoa  in  the  winter  of  1914  and  1915,  when  for  a  time 
the  port  got  so  full  of  steamers  that  sixteen  of  them  were 
lying  in  nearby  ports  waiting  to  discharge  cargoes  of  grain,  ni- 
trate, etc.,  a  large  part  of  which  got  to  Germany.^ 

The    increase   of   trade  through   the   northern   neutrals    was 
astonishing: 

Before  the  war  the  United  States  exported  only  negligible 
quantities  of  aluminum  to  Germany  and  the  six  neutrals. 
In  1912  we  sent  $5,709  worth  to  the  six  neutrals.  But 
in  1915  we  sent  more  than  $411,000  worth  to  Norway  and 
Sweden  alone. 

Neither  the  Netherlands  nor  any  other  of  the  northern 

^  New  York  Evening  Post,  June  30,  1917. 

'  R.  de  Tankerville,  New  York  Evening  Post,  June  30,  1917. 

'  Fairphy,  January  1.  1915,  p.  103;  November  12,  1914,  p.  746. 


TRADE    DISLOCATIONS    DUE    TO    WAR  99 

neutrals  took  any  special  quantity  of  brass  from  us  prior  to 
the  war.  They  all  developed  an  interest  in  our  brass,  how- 
ever, just  about  the  same  time  that  it  began  to  be  very 
important  for  Germany  to  secure  additional  supplies  of  it. 
Denmark,  which  had  been  importing  less  than  $20,000  worth 
annually,  increased  her  purchases  to  $143,000,  Norway 
jumped  from  $5,845  in  1912  to  $183,321  in  1916." 

Holland  had  been  buying  about  $25,000,000  worth  of  copper  a 
year  from  the  United  States,  largely  for  industrial  Germany  up 
the  Rhine,  but  Englanxl  soon  cut  that  to  $2,000,000,  although 
there  was  a  great  increase  in  Sweden's  copper  trade  during  1915 
and  1910. 

Tinplate  to  the  six  neutrals  went  up  from  less  than  400,000 
pounds  in  1912,  to  9,000,000  pounds  in  1916.  By  every  possible 
means  Germany  increased  her  stocks  of  materials,  even  before 
the  British  blockade  had  begun.  They  took  a  census  of  copper 
throughout  the  Empire,  which  listed  the  roof  of  the  Reichstag 
building,  and  the  cooking  pots  in  the  Emperor's  kitchens,  and 
then  scraped  and  smuggled  to  save  His  Majesty's  culinary  outfit. 

Food  also  apparently  went  to  Germany  by  the  roundabout  way. 

Before  the  war  Germany  bought  annually  considerable 
quantities  of  American  rice  and  Norway  none.  Since  the 
outbreak  of  the  war  Norway  has  bought  practically  what 
Germany  used  to  take,  and  Germany  has  had  none.^ 

In  the  same  way  dried  fruits  to  the  northern  neutrals  have  in- 
creased in  amounts  just  about  equal  to  that  taken  by  Germany 
before  the  war.  Vegetable  oils  went  up  four  or  fivefold,  bacon 
from  15,000,000  pounds  to  60,000,000  pounds,  and  sole  leather 
from  200,000  pounds  in  1912  to  12,000,000  pounds  in  1916.  It 
is  little  wonder  that  the  English  and  French  said  bitter  things 
about  the  American  profiteers. 

England  attempted  to  stop  this  trade  so  far  as  she  could  by 
making  her  famous  black  list  of  firms  with  which  English  sub- 

'  O.  K.  Davis,  March,  1917. 


100  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

jects  could  not  trade  because  the  firms  were  more  or  less  German, 
had  German  capital,  or  were  aiding  Germany.  To  the  vigorous 
American  protest  concerning  this  action,  the  British  answer  was 
sound.  This  they  said  was  no  attempt  to  influence  American 
trade.  It  was  merely  an  order  to  English  citizens  as  to  with 
whom  they  should  or  should  not  do  business. 

Running  the  British  Blockade 

When  cotton  reached  $4  a  pound  in  Germany,  January,  1916, 
and  some  other  commodities  were  of  equal  value,  we  can  see  an 
explanation  for  the  great  ingenuity  of  parcel  post  traders  who 
sent  packages  seeming  to  be  newspaper,  but  which  were  hollowed 
out  with  a  cavity  in  the  middle  for  hidden  freight.  Corrugated 
wrapping  papers  often  had  in  each  corrugation  a  tiny  strand  of 
copper  wire,  or  a  tiny  filament  of  rubber.  Books  were  hollowed 
out  and  turned  into  little  trunks.  One  of  the  most  ingenious 
cases,  and  one  which  illustrates  the  difficulties  of  blockade  and 
the  straits  of  Germany  for  a  valued  product,  is  the  following: 
From  an  American  port  parcels  were  sent  by  post  to  a  China- 
man at  Shanghai  who  rewrapped  and  sent  them  to  a  Chinaman 
near  Singapore.  He  rewrapped  and  sent  them  to  another  China- 
man near  Bombay.  This  man  in  turn  forwarded  them  to  Persia, 
and  they  went  through  British  parcel  post,  despite  the  fact  that 
they  contained  a  product  imported  by  Persia.  Final  transference 
from  Persia  overland  to  the  Turks  and  thence  to  Berlin  was 
simple. 

The  War  Changes  United  States  Policy  in  Industry  and  Trade 

When  the  United  States  entered  the  war,  the  problem  of  trade 
control  was  simplified  for  Britain,  but  very  much  complicated  for 
the  neutrals.  Instead  of  officially  protecting  American  exports 
that  were  bound  eventually  for  Germany  via  Holland,  Denmark, 
Norway,  Sweden,  or  Spain  we  now  became  really  interested  in 
destinations. 

It  was  high  time,  for  in  the  months  preceding  our  entrance 


TRADE    DISLOCATIONS    DUE    TO    WAR  101 

into  the  war  we  had  steadily  strengthened  Germany  through  the 
oil-cake  and  the  cottonseed  meal  that  were  sent  to  the  Dutch  and 
Scandinavian  cows,  and  also  through  the  vegetable  oil,  bacon, 
grain,  metals,  cotton  that  went  to  these  northern  neutrals. 

When  we  entered  the  group  of  trade  controlling  nations,  we 
passed  a  trading  with  the  enemy  act  and  started  on  a  stage  of 
rapid  evolution,  and,  as  with  the  conscript  army  and  other  war 
matters,  we  repeated  the  steps  that  had  been  taken  by  the  nations 
that  had  been  earlier  pressed  by  the  war.  The  trade  restrictions 
of  the  war  in  their  simple  chronicles  would  fill  volumes.  Only 
their  general  tendencies  can  be  mentioned  here. 

Early  in  the  war  Britain  was  suddenly  called  upon  to  produce 
munitions  in  quantities  before  unimagined.  She  had  to  take  con- 
trol of  the  output  of  the  cruder  iron  and  steel  industries,  thus 
guaranteeing  that  the  war  industries  got  their  raw  material.  To 
concentrate  labor  on  essentials,  new  buildings  could  only  be  built 
with  special  permission,  which  unless  it  was  a  war  enterprise  was 
universally  refused,  except  for  structures  costing  less  than  £500, 
so  that  by  1917  houses  were  very  scarce  in  many  parts  of 
England. 

Before  the  war  was  two  years  old,  English  industries  and 
consumption  were  beginning  to  feel  the  shortage  of  imports,  of 
which  about  one-fifth  (12  to  15  million  tons)  were  classed  as 
non-essentials  that  could  be  spared.^  The  editor  of  Fairplay 
estimated  in  the  spring  of  1916  that  prohibitions  or  semi-prohibi- 
tions of  the  government  had  already  stopped  about  one-third  of 
this,  leaving  9,000,000  more  tons  which  could  be  dispensed  with 
in  the  interests  of  the  national  service.  Sixteen  months  later,  in 
the  autumn  of  1917,  a  new  definition  of  dispensable  and  indispen- 
sable had  been  adopted,  for  the  British  Government  officials  ad- 
mitted that  the  normal  British  imports  of  60,000,000  tofis  for 
civilian  use  had  shrunk  to  25,000,000  tons  and  still  the  submarine 
was  sinking  ships  much  faster  than  they  were  being  built.  This 
makes  it  clear  why  the  British  Government  ordered  the  ending 
of  the  entrepot  trade  to  France ;  why  in  the  early  months  of  1918 

'Fairplay,  May  11,  1916,  p.  730. 


102  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

the  British  cotton  mills  began  to  \^  partly  unemployed;  why 
European  publicists  l)egan  to  suggest,  March,  11) is,  that  perhaps 
Europe  had  better  have  food  rather  than  soldiers  from  America, 
and  why  the  United  States  and  England  commandeered,  (March, 
1918)  a  million  tons  of  Dutch  shipping. 


Government  Control  in  Industry 

The  pressure  of  these  ever  hardening  necessities  has  caused  an 
almost  infinite  number  of  exercises  of  national  control  of  imports, 
exports,  and  industries.  With  the  declining  supply  of  shipping 
the  British  Government  found  that  they  could  not  leave  trade  to 
the  free  arrangement  by  individuals,  for  the  reason  that  luxuries 
could  outbid  the  necessities  and  get  the  ships.  A  small  increase 
of  percentage  of  value  on  luxuries  would  make  a  tremendous 
freight  possible,  whereas  anything  like  the  same  amount  of  in- 
crease on  necessities  would  make  an  impossible  price.  So,  to 
prevent  luxuries  outbidding  necessities,  and  the  economic  wel- 
fare of  the  nation  from  suffering,  the  government  acting  under 
orders  in  council  under  the  Defense  of  the  Realm  .\ct,  made  one 
commission  after  another  to  control  imports.  They  l>egan  with 
sugar,  then  wheat,  then  corn,  oats,  oil-cake,  until  the  whole  cereal 
group  was  under  control.  This  of  course  took  away  the  business 
of  importers  who  had  been  handling  these  goods,  but  the  gov- 
ernment virtually  requisitioned  the  importing  firm  to  do  business 
for  the  government.  They  allowed  the  wheat  importer,  for 
example,  a  satisfactory  sum  for  handling  grain,  enough  to  allow 
him  a  moderate  profit.  After  this  the  miller  was  allowed  to  buy 
it  on  condition  that  he  made  a  moderate  set  profit  in  grinding. 
Then,  the  food  controller,  if  he  found  bread  selling  at  a  high 
price,  could  start  right  back  along  the  line,  see  who  had  been 
profit  grabbing  and  stop  him,  and  so,  beginning  with  government 
import  and  price  control,  they  kept  unreasonable  profiteering  at 
a  minimum,  and  prices  were  therefore  much  lower  than  in  the 
United  States,  and  the  war  was  therefore  less  expensive. 

If  wages  or  other  costs  of  business  go  up  and  some  of  the  men 


TRADE    DISLOCATIONS   DUE    TO    WAR  103 

along  the  line  between  the  importer  and  consumer  are  losing 
money,  they  can  come  before  the  commission,  prove  their  case, 
and  get  a  slight  increase  in  profit.  But  the  conspicuous  thing  is 
the  small  amount  of  this  that  has  happened.  All  England  has 
become  a  war  machine.  As  the  work  enlarged,  its  organization 
was  made  more  permanent  by  having  a  Ministry  of  Munitions, 
a  Ministry  of  Food  Control,  a  Ministry  of  Shipping,  etc. 

Nothing  was  too  large,  nothing  too  small,  to  come  under  this 
government  control.  .\t  one  end  of  the  iron  industry  the  British 
took  possession  of  all  the  iron  ore  mines  in  the  counties  of 
Cumberland  and  Lancashire,^  and  at  the  other  end  the  British 
War  Office  forbade  the  sale  or  loan  or  manufacture  of  a  hosiery 
needle  without  the  permission  of  its  hosiery  committee."  No 
one  c(juld  sell  or  export  wood-working  machinery  without  a 
license,  and  so  on  for  many  possible  pages. 

Controlling  Trade  to  Aid  the  War 

The  United  States  promptly  adopted  the  same  principle.  In 
the  autumn  of  IKIT  we  prohibited  export  of  coal  for  a  time 
across  the  Lakes  to  Canada,  so  that  the  coal  might  go  instead 
up  the  Lakes  to  our  own  Northwest.  A  little  later  on  it  was 
allowed  to  go  to  Canada  by  special  license  for  each  shipment.^ 
The  United  States  suddenly  prohibited  the  export  of  sulphur 
to  Canada  in  September  until  we  could  investigate  local  supplies 
and  local  needs  to  see  whether  or  not  we  had  the  sulphur  to  spare. 
Sweden  at  the  beginning  of  winter  (September,  1917)  requisi- 
tioned all  fodder  within  the  kingdom  and  gave  a  very  long  and 
specific  list  of  articles  that  were  fodder.*  Spain,  by  royal  order, 
prohibited  the  export  of  fresh  olives  in  January,  1918.^ 

Examples  of  this  sort  by  the  score  can  be  had  from  all  quarters 
of  the  world,  even  from  the  neutrals  who  are  not  adjacent  to 
combatants.     For  instance,  Guatemala  prohibited  the  export  of 

'  Official  Bulletin.  .Anpust  2.  1917,  p.  5. 
'  Ibid..  October  13,  1917.  p.  8. 

*  Ibid..  October  2.  1917.  p.  1. 

*  Ibid..  September  29.  1917,  p.  4. 

''U.  S.  Commerce  Reports,  January  31,  1918,  p.  402. 


104  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

cattle  into  Mexico.     This  example  has  no  new  principle  in  it  at 
all.  even  no  new  method. 

By  the  autumn  of  1917,  with  the  United  States  in  the  war  and 
helpini;-  rather  than  hindering  trade  restrictions,  the  matter  of 
trade  control  became  more  systematized.  The  British  embargo 
put  exports  into  three  classes : 

a.  Those  prohibited  to  all  destinations. 

b.  Those   prohibited   to   all   destinations   other    than    British 

Colonies  and  protectorates. 

c.  Those  prohibited  to  all  destinations  in  Europe  and  on  the 

Mediterranean  and  Black  Seas  other  than  Allied  coun- 
tries and  Spain. ^ 

About  this  time  France  had  a  million  tons  of  raw  materials 
piled  up  in  the  Atlantic  ports  of  the  United  States  and  her  muni- 
tion plants  were  running  part  time,  so  that  her  trade  restrictions 
took  on  the  more  strenuous  form  of  licensing  every  shipment  of 
import  and  approving  the  route  of  every  vessel  that  sailed.  She 
also  reduced  her  sailings  between  distant  points  like  Madagascar, 
Argentina,  New  Orleans,  in  the  interests  of  more  frequent 
shorter  voyages  across  the  North  Atlantic. 

After  the  outbreak  of  the  war  our  Congress  promptly  placed  in 
the  hands  of  the  President  very  inclusive  powers  for  the  control 
of  commerce.  At  the  beginning  of  the  enforcement  of  the  law. 
President  Wilson,  in  a  proclamation,  stated : 

It  is  obviously  the  duty  of  the  United  States  in  liberating 
any  surplus  products  over  and  above  our  own  domestic 
needs  to  consider  first  the  necessities  of  all  the  nations  en- 
gaged in  war  against  the  Central  Empires.  As  to  neutral 
nations,  however,  we  also  recognize  our  duty.  ...  In  con- 
sidering the  deficits  of  food  supplies,  the  government  means 
only  to  fulfil  its  obvious  obligation  to  assure  itself  that  neu- 
trals are  husbanding  their  own  resources  and  that  our  sup- 
plies will  not  become  available,  either  directly  or  indirectly, 
to  feed  the  enemy. 

'  U.  S.  Comvicrcc  Reports,  October  23,  1917,  p.  305. 


TRADE    DISLOCATIONS    DUE    TO    WAR  105 

By  executive  order  he  created  an  Exports  Council  (June  22, 
1917)  "  to  formulate  policies  and  make  recommendations  neces- 
sary to  carry  out  the  purposes  of  the  law."  This  council  con- 
sisted of  the  Secretaries  of  State,  Agriculture,  Commerce,  and 
the  Food  Administration.  Execution  of  the  law  was  in  the 
hands  of  the  Secretary  of  Commerce.  The  first  license  they 
granted  was  to  Captain  Raoul  Amundsen,  for  shipment  of  food 
"  from  the  United  States  to  Raoul  Amundsen,  at  the  North 
Pole."  Within  a  week  the  Exports  Council  published  a  list  of 
eighty-seven  articles  of  which  export  was  prohibited. 

Two  months  later,  August  21,  the  President  created  an 
Exports  Administrative  Board,  composed  of  representatives  of 
Secretaries  of  State,  Agriculture,  Commerce,  Food  Administra- 
tion, and  the  Shipping  Board,  and  gave  them  the  executive 
authority  that  had  previously  been  vested  in  the  Secretary  of 
Commerce.  At  the  same  time  he  added  the  chairman  of  the 
Shipping  Board  to  the  Exports  Council  and  limited  the  functions 
of  that  body  to  advice  upon  such  matters  as  may  be  referred  to 
them  by  the  President  or  the  Administrative  Board. 

On  October  12  another  change  of  administration  was  made  by 
adding  the  Secretary  of  the  Treasury  to  the  list  of  men  in  charge 
of  the  Administration  of  Exports,  and  the  new  body  was  called 
the  War  Trade  Board.  Our  list  of  prohibited  exports  rapidly 
grew  until  the  list,  as  published  in  the  Official  Bulletin  for 
October  22.  contained  GO  articles  and  classes,  including  wool, 
copper,  tin.  machines,  all  of  which  were  practically  prohibited, 
and  ten  columns  of  articles  which  could  only  be  exported  with 
special  license  for  each  shipment. 

Xoveml)er  28  the  President  issued  a  proclamation  making 
operative  the  law  for  the  control  of  imports,  and  we  found  our- 
selves rapidly  approaching  the  position  of  our  European  allies, 
especially,  as  by  midwinter,  we  brushed  all  these  complications 
aside  and  adopted  the  general  policy  of  licensing  all  imports  and 
all  exports.  On  March  22  we  went  a  step  farther.  The  War 
Trade  Board  announced  a  List  No.  1  of  82  classes  of  imports 
which  it  termed  "  least  essentials  "  which  will  be  almost  pro- 


lOG  IXl-LL'KNCE    Ul-     THE    GREAT    WAR    Ll'D.N    SIlirriNG 

hibited  after  April  !'».  Licenses  to  import  will  only  l^e  available 
when  it  can  be  shown  that  space  is  a\ailable — a  very  ellcctive 
limitation. 

The  Ofi  rial  Mind  Retlaces  Siitlv  and  Demand 

All  these  changes  make  a  comj)lete  destruction  of  the  old  basis 
of  trade  in  which  individual  need,  individual  initiative,  the  law 
of  supply  and  demand,  guided  by  the  desire  of  gain,  had  been 
allowed  to  meet  the  nation's  needs.  In  place  of  all  these  time- 
proved  and  time-honored  adjustments  we  now  have  the  will 
of  an  official  saying  who  shall  buy  and  who  shall  not,  and  what 
shall  be  bought  and  what  shall  not  be  bought.  Thus  in  midwinter 
a  shipowner  came  before  the  chartering  committee  of  the  Ship- 
ping Board,  seeking  permission  to  take  a  cargo  of  resin  and 
barbed  wire  to  Para,  Brazil.  It  was  refused,  but  he  could  take 
coal.  He  had  no  alternative,  so  he  took  coal,  which  would  keep 
ice  plants  and  factories  running  in  Para,  whereas  resin  would 
merely  make  soap,  and  the  barbed  wire  would  l^e  a  drain  on  our 
home  industry.  Returning,  the  ship  captain  wished  to  bring  a 
cargo  of  Brazil  nuts.  He  was  refused.  Statistics  of  the  period 
showed  that  we  had  imported  heavily  of  Brazil  nuts  the  previous 
six  months,  but  the  aeroplane  factories  needed  cedar  logs,  which 
the  captain  was  permitted  to  bring  and  did  Ijring.  Similarly 
other  men  wished  to  clear  their  ships  to  Africa,  to  Australia,  to 
Brazil.  The  chartering  committee  refused,  but  said  they  could 
go  to  the  west  coast  of  South  America  and  that  they  must  take 
coal.  They  did  so,  for  the  Shipping  Board  was  the  agency  by 
which  this  government  was  providing  itself  with  nitrate  of  soda, 
for  which  the  war  had  given  us  enormously  increased  demands, 
and  by  sending  coal  outward  to  the  nitrate  coasts  we  were  guar- 
anteeing that  the  mines  and  railroads  of  those  countries  kept  the 
wheels  of  basal  industry  turning. 

All  this  control  of  the  import  and  export  for  national  purposes 
and  for  the  starvation  of  the  Central  Empires  naturally  left  the 
economically  dependent  neutrals  out  of  account,  and  brought 
vigorously  to  the  fore  the  question  of  international  policy  with 


TRADE    DISLOCATIONS    DUE    TO    WAR  107 

regard  to  the  neutral.  There  was,  for  example,  the  case  of  the 
row  of  loaded  Dutch  steamships  which  lay  anchored  in  the 
Hudson  at  New  York,  but  each  day  they  were  refused  permission 
to  sail.  For  six  long  months  they  lay  there,  at  an  expense  of 
two  or  three  or  five  thousand  dollars  each  per  day,  paying  their 
crews  and  waiting  for  the  permits  that  were  steadily  refused, 
although  rumor  has  it  that  their  owners  were  receiving  pay  for 
the  ships'  time  from  the  German  Government.  Finally,  how- 
ever, the  lonj^  siege  was  broken,  the  cargoes  were  unloaded  and 
sold  for  American  consumption,  the  vessels  chartered  by  the 
United  States  (iovernment  and  put  in  the  South  American  trade. 

Nations  as  Bargainers 

As  the  trade  between  the  United  States  and  many  other  coun- 
tries had  become  for  each  shipment  a  matter  of  request  and  per- 
mission between  the  individual  and  the  government,  so  inter- 
national trade  has  become  a  question  of  bargain  and  dicker 
ijetween  the  different  governments.  For  example,  Sweden  in- 
formed the  British  Government  of  her  intention  to  prohibit  the 
export  of  fish,  whereupon,  and  not  before,  the  United  Kingdom 
permitted  two  cargoes  of  lubricant,  so  vitally  needed  in  Sweden, 
to  go  forward.*  Japan  bargained  hard  and  long  for  American 
steel  that  she  might  build  ships  and  not  hire  or  sell  any  ships  back 
to  the  United  States,  but  we  were  obdurate.  If  we  could  not 
get  some  ships,  we  would  not  sell  the  extra  steel,  and  we  did  not. 
It  was  much  easier  for  us  to  arrange  with  Britain  for  the  release 
of  the  necessary  burlaps  from  Calcutta  to  pack  the  Cuban  sugar 
crop.  One  of  the  interesting  war  trade  dickers  occurred  between 
Argentina  and  the  United  States.  We  wanted  Argentine  wool, 
which  did  not  take  much  ship  space,  and  they  wanted  coal,  which 
took  more  space.  As  the  shutting  down  of  the  power,  light  and 
gas  plants  in  Buenos  Aires  was  imminent,  it  is  plain  that  we  had 
the  stronger  hand  at  the  game.  An  almost  amusing  element  was 
added  to  the  episode  by  the  fact  that  the  companies  using  this 
coal  for  the  convenience  of  the  Argentine  were  German. 

•  Official  Bulletin.  July  12,  1917,  p.  1. 


108  INFLUENCE   OF    THE    GREAT    WAR    UPON    SHIPPING 

Before  we  had  been  many  months  in  the  war  almost  all  the 
European  neutrals  came  to  us  to  beg,  sending  commissioners 
after  the  fashion  of  the  Allies.  The  arrangements  with  Nor- 
way, whose  commission  was  headed  by  the  famous  Fridtjof 
Nansen,  hero  of  the  Arctic  ice,  is  typical.  After  months  of  nego- 
tiation we  finally  made  a  bargain  with  Norway,  and  the  War 
Trade  Board  made  a  public  statement  concerning  it.^  This  is  a 
remarkable,  almost  a  ludicrous,  document.  It  sounds  like  the 
scriptural  father  talking  to  the  prodigal  sou  as  he  equijjped  him 
for  a  second  journey  into  the  wicked  world.      In  part  it  says : 

L'ntil  very  recently  the  board  was  engaged  in  determining 
the  commodities  and  quantities  the  United  States  could 
spare,  her  own  and  her  associates'  needs  and  the  require- 
ments of  the  other  neutrals  being  given  due  consideration. 

On  January  18  a  conclusion  was  reached  with  respect  to 
a  large  numljer  of  these  items  and  a  list  was  handed  to 
Dr.  Xansen. 

When  it  was  found  that  further  time  would  be  required 
to  obtain  full  informati(jn  concerning  the  quantities  of  the 
remaining  supplies  nectled  by  Norway,  the  board  deemed  it 
fairer  to  state  its  willingness  to  furnish  those  commodities, 
the  quantities  to  be  hereafter  fixed  in  accordance  with  Nor- 
way's necessities  when  ascertained. 

The  proposed  schedule  of  commodities  agreed  to  by  the  United 
States  and  her  associates  in  the  war  as  sufficient  to  cover  "  this 
year's  Norwegian  requirements,  considering  the  existing  condi- 
tions," is  very  specific,  containing  among  other  things  the  follow- 
ing items : 

Metric  Tons 

Bread  grains,  including  rice   300,000 

Starches    1,000 

Sauces  and  pickles   80 

Spices    382 

Antimony     12 

No  longer  does  Hans  import  at  will.  We  examine  his  larder 
very  carefully  and  conclude  that  he  needs  next  year  just  80  metric 

'  Official  Bulletin,  January  28,  1918,  p.  13. 


TRADE    DISLOCATIONS    DUE    TO    WAR  109 

tons  of  pickles,  no  more,  no  less.  No  more  does  he  get,  and  we 
make  him  give  many  promises  as  to  what  he  will  and  will  not 
do  with  them,  and  what  he  will  and  will  not  send  to  Germany. 
In  the  meantime  conditions  in  Norway's  larder  are  such  that 
they  are  not  likely  to  export  much  to  Germany,  for  the  special 
correspondent  of  the  Christian  Science  Monitor^  quoted  Mr. 
Haakon  Five,  Director  of  Rationing,  as  saying : 

In  future,  the  feeding  of  cattle  on  any  kind  of  grain  would 
be  forbidden.  It  would  be  necessary  to  set  aside  a  small 
quantity  for  the  pigs,  but  most  of  the  pigs  would  have  to  be 
killed  whilst  poultry  would  have  to  be  reduced  by  two-thirds. 
In  order  to  maintain  the  farm  work  it  was  absolutely  essen- 
tial to  set  aside  80,000  tons  for  fodder,  nearly  all  of  this 
being  apportioned  to  the  horses.  As  great  endeavors  were 
to  be  made  to  increase  the  area  under  grain  by  1,000,000 
maal,  a  further  80.000  tons  must  be  set  aside  for  seed,  leav- 
ing lioO.OOO  tons  for  human  food.  When  it  is  considered 
that  the  normal  imports  into  Norway  of  rye,  wheat,  and  so 
forth  are  generally  some  500,000  tons,  it  will  be  seen  that 
the  government  have  very  good  reasons  for  resorting  to  the 
present  drastic  rationing. 

The  present  scheme  allows  of  200  grammes  per  day  of 
all  kinds  of  cereal  and  peas.  The  corresponding  British 
ration  is  :535  grammes,  whilst  the  German  bread  ration  is 
much  higher  than  that  of  Norway.' 

This  merelv  means  that  at  peace  Norway's  food  supply  is  very 
similar  to  that  of  France  at  war,  as  indicated  by  the  speech  of 
Mr.  Andre  Tardieu,  March,  1918,  in  which  he  implores  the 
United  States  to  send  France  more  cereals : 

You  are  aware  that  the  French  nation  has  always  lived 
mostly  on  wheat  bread.  Our  prewar  consumption  was 
700  000  tons  per  month.  Our  present  consumption  has  been 
now  reduced  to  530,000  tons,  a  reduction  of  about  2o  per 
cent. 

=  f/enmark  found^herself  in  a  similar  situation  (Omdal  Bulletin,  January 
2.  1918  p  2).  and  Sweden  had  preceded  them  both  m  the  adoption  of 
rationing. 


110  IXFLUEXCIi    OF    THE    GREAT    WAR    L  TON    SII  H'lMNT, 

Feeding  of  horses  and  cattle  on  cereals  which  could  l)e 
used  for  the  making  of  bread  has  been  prohibited.  This 
resulted  in  a  decrease  of  ')()  per  cent  in  the  number  of  horses 
in  France  and  in  an  important  reduction  in  our  cattle. 

We  have  radically  suppressed,  on  the  other  hand,  all 
flour-consuming  industries.  The  manufacturing  of  biscuits 
and  of  pastry  has  been  completely  prohibited.  Strict  rules 
have  been  imposed  on  hotels  and  restaurants,  namely : 

Absolute  suppression  of  fancy  bread. 

We  have  reduced  our  sugar  consumption  l)y  4'.»  per  cent; 
our  rice  consumption  by  (H  per  cent;  our  imports  of  dried 
vegetables  have  been  reduced  by  "»-  per  cent;  of  oils  and 
fats  by  }s  per  cent. 

I  am  aware  of  what  you  have  d(jne  in  order  to  reduce  your 
domestic  consumption  and  to  increase  your  exports.  But 
you  must  do  more.     You  must  do  it  l)ecause  it  can  be  done.^ 

And  still  the  sul^marines  are  sinking  merchantmen  and  the  war 
demands  ever  more  shipping.  Trade  is  cut  almost  to  the  bone. 
What  next?  Mr.  Tardieu  says  America  must  make  savings, 
because  she  alone  can.     He  is  right. 

Scientific  Restriction-  of  Trade 

How  can  we  so  change  life  and  industry  that  it  will  result  in 
economy  of  shipping?     There  are  three  ways. 

a.  Cutting  the  luxury  out  of  our  industry  and  out  of  our  lives. 

b.  Cutting  out  crisscross  trade. 

c.  Developing  home  supplies  of  heavy  imports. 

(a)    Cutting  out  of  Luxuries 

What  is  a  luxury,  a  dispensable  luxury  ?  The  decision  is  one 
before  which  administrations  tremble,  particularly  in  democracies, 
until  they  are  given  the  courage  of  desperation.  We  are  getting 
it — years  too  late.  England  and  France  have  already  had  it. 
For  example,  the  pleasure  automobile  has  long  since  all  but  dis- 

'  Andre  Tardieu,  French  High  Commissioner  to  U.  S.  Philadelphia  Xorth 
American,  March  19,  1918. 


TRADE    DISLOCATIONS    DUE    TO    WAR  111 

appeared  from  Berlin,  from  London,  and  from  Paris,  and  many, 
many  other  things  in  its  wake.  With  war  loans,  drafts,  priority, 
and  a  War  Trade  Board,  we  are  at  last  moving  in  the  same  direc- 
tion— years  too  late. 

(b)  Cutting  out  Crisscross  Trade 

In  our  arrangement  of  individualism,  with  each  man,  each  city, 
each  State,  seeking  its  own  markets,  and  its  own  supplies,  the 
movement  of  goods  has  been  along  the  lines  of  an  almost  ridicu- 
lous crisscross  trade,  commodity  X  going  from  city  B  to  city 
C,  and  from  city  C  back  to  city  B.  Here  is  an  actual  example :  A 
farmer  in  Bedford  County,  Pa.,  hauled  a  barrel  of  apples  to  his 
station,  and  .shipped  it  by  train  40  miles  to  Altoona.  There  it 
was  put  upon  a  dray  and  hauled  to  a  commission  merchant's 
place.  -After  keeping  it  for  a  few  days  the  merchant  sold  it  to 
a  man  who  hauled  it  to  the  station  and  shipped  it  114  miles  over 
the  Alleghany  mountains  to  IMttsburgh.  It  was  again  put  in  a 
dray,  taken  to  a  commission  house,  again  sold  and  again  hauled 
back  to  the  station,  put  on  a  train  and  shipped  back  to  Altoona, 
carted  to  a  commission  merchant's  store,  sold  to  a  retail  grocer, 
who  hauled  it  to  his  store,  broke  it  open  and  delivered  the  con- 
tents in  many  small  lots  to  his  customers.  Four  sales,  six  cart- 
ings, three  railroad  journeys,  and  all  on  one  barrel  of  apples. 

We  can  not  afford  that  kind  of  nonsense  when  the  railroads  are 
overcrowded  with  war  work  as  they  are  now.  All  that  wasted 
work  happened  to  the  barrel  of  apples  because  the  marketing  of 
food  was  unorganized.  Each  man  was  working  by  himself  in 
the  dark,  in  an  unorganized  way.  Marketing  must  be  organized 
so  that  we  can  work  together,  and  know  where  to  send  things 
to  make  the  least  hauling.  So  far  as  possible  each  neighborhood, 
each  county,  each  State,  and  each  nation,  must  feed  itself  and  it 
must  be  planned  in  advance.  Out  of  the  chaos  of  individualism 
must  come  the  precision  of  order,  akin  to  that  to  be  produced  by 
an  Economic  General  Staff,  which  unfortunately  we  have  needed 
but  have  not  had. 

Perhaps  the  reader  thinks  this  dry  land  apple  story  does  not 


112  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

apply  to  international  trade.  But  it  does,  and  thereby  hangs  the 
possibility  of  ship  saving  in  the  year  11)18.  As  proof  that  it  exists 
in  international  trade,  I  will  cite  a  few  facts  from  our  own  for- 
eign trade.  In  ten  months  in  1U17  the  United  States  imported 
274,0()0.()()0  pounds  of  rice,  and  exported  201,000,000  pounds. 
Some  uf  it  went  to  Greece,  yet  the  main  source  of  supply  of  rice 
for  the  world's  export  is  Burma,  l^eyond  Suez.  Despite  the 
fact  that  Europe  wails  for  food,  we  imported  in  that  ten  months 
1)0,500,000  pounds  of  macaroni  from  Europe.  We  exported 
12,000,000  pounds  of  peanuts,  and  imported  48,000,000  pounds, 
enough  to  have  kept  a  r),000  ton  steamer  busy  for  a  year.  It 
sounds  unbelievable,  but  the  tonnage  busy  at  carrying  corn  from 
Argentina  to  the  United  States  in  11)17  (the  greatest  corn  pro- 
ducer in  the  world)  would  carry  2.000,000  bushels  of  wheat  a  year 
to  the  arm)'  in  Erance.  The  list  might  l)e  extended,  but  the  point 
is  certainly  proved.  The  existence  of  such  traffic  in  the  year  of 
ship  famine  11)17  shows  clearly  that  government,  despite  its  many 
attempts  to  control  trade,  had  scarcely  appreciated  that  there  was 
such  a  thing  as  scientific  utilization  of  shipping.  The  whole 
Allied  world  is  busy  today  in  the  attempt  to  cut  waste  motion 
out  of  trade.  Let  us  hope  that  it  succeeds,  for  it  will  be  one 
of  the  great  achievements  of  the  war.  and  should  endure  to  some 
extent  after  it  is  over. 

The  same  thing  needs  to  be  done  for  every  little  town,  for 
every  big  city,  for  every  nation,  as  well  as  for  international  trade. 
England  has  tried  it  with  her  railroads  and  her  coal  by  districting 
Ihe  regions  of  coal  production  and  regions  of  coal  consumption, 
so  that  coal  would  move  in  the  shortest  and  most  direct  line  from 
mine  to  furnace  door.  The  United  States,  through  the  Fuel 
Administration,^  has  attempted  to  do  the  same  thing,  and  our 
War  Trade  Board  with  its  export  licenses  and  import  licenses 
must  of  course,  as  soon  as  possible,  apply  itself  to  the  task  of 
so  controlling  our  imports  and  exports  that  there  shall  not  be  a 
single  ton  mile  of  ship  space  wasted.  Let  us  hope  that  the  trade 
statistics  of  1918  when  they  are  compiled,  will  show  an  almost 

'  Official  Bulletin,  January  3,  1918,  p.  5. 


TRADE    DISLOCATIOXS    DUE    TO    WAR  113 

complete  absence  of  the  amazing  crisscross  trade  that  still  existed 
in  international  trade  as  late  as  1917  when  the  United  States 
imported  about  2,000,000  tons  of  sugar,  and  reexported  027,000 
tons  of  it.  In  that  one  item  is  a  huge  vessel  movement.  In  ten 
months  of  that  year  we  imported  1,085,000  bushels  of  beans  and 
exported  1,000,000.  We  imported  cottonseed  from  Brazil  and 
sent  cottonseed  oil  back  again.  They  should  have  made  their 
own  oil,  fed  the  meal  to  their  own  cattle  and  exported  the  meat 
to  Britain.  Despite  the  famine  of  food  fats  in  Europe,  our 
consul  in  Malaga,  Spain,  reported  in  the  autumn  of  1917  a  sub- 
stantial increase  in  export  of  olive  oils  to  the  United  States.^ 

Through  the  export  license  intelligently  applied,  we  should  see 
to  it  that  during  1918  and  any  succeeding  war  years  we  bring 
nothing  to  our  shores  that  does  not  need  to  come,  or  that  we 
can  produce  here  ourselves.  And  the  same  thing  is  being  applied 
by  our  allies,  and  the  saved  space  will  be  needed,  every  ton  of 
it  for  many,  many  months  even  if  the  submarine  is  put  under 
control. 

(c)   Developing  Home  Supplies  of  Heavy  Imports 

A  couple  of  years  ago  a  highly  educated  young  German  said 
to  an  .American,  "  We  would  have  no  trouble  fixing  you  if  you 
got  into  the  war.  We  would  just  send  a  few  submarines  to  blow 
up  the  ships  that  bring  you  manganese  ore  from  Brazil  and  your 
steel  industry  would  crumple  up  so  that  you  couldn't  do  any- 
thing." 

Therefore  safety  and  ship  economy  alike  should  urge  us  to 
make  every  effort  to  reduce  the  import  of  vital  ores  of  which 
manganese  is  the  most  essential  alloy  for  high-grade  steel  for 
munitions  and  important  industrial  uses.  The  war  has  doubled 
our  import  of  it.  Flake  graphite  is  necessary  for  the  crucibles 
to  make  crucible  steel  and  brass.  Tungsten  is  necessary  for  high 
speed  tool  steel,  and  is  supposed  by  experts  to  be  the  material  of 
the  new  and  terrifying  74-mile  gun  of  the  Germans.     Antimony 

'  U.  S.  Commerce  Reports,  November  12,  1917,  p.  580. 


]14  INFLUENCE    OF    THE    GREAT    U  AK    IPOX    SIlirPING 

is  required  for  hardening  lead  bullets.  Chromite  is  used  tor 
making  armor  plate.  Magnesite  and  mica  are  also  indispensable 
in  metallurgical  industries.  Secretary  of  the  Interior  Lane  said 
(  l''el)ruary.  rJl8), 

-American  mines  can  pnxluce  all  of  these  minerals,  providing 
they  are  given  the  necessary  assistance  of  the  federal  gov- 
ernment. I  have,  therefore,  asked  Congress  to  make  a  spe- 
cial api)roi)riation  so  that  a  large  force  (jf  metallurgists  can 
l)e  set  to  work  immeiliately  on  the  necessary  chatiges  in 
practice  to  use  lower  grade  manganese  ores. 

The  request  of  the  Secretary  is  wise,  for  herein  lies  the  possi- 
l)ility  of  increasing  tiie  national  security  and  reducing  tonnage 
that  now  brings  us  I'.ooo.oiio  tons  of  mineral  imports. 

Trade  After  the  W  ar 

At  the  ])resent  moment  every  nation  on  earth  is  being  C(jm- 
pelled  by  ship  shortage  and  trade  restrictions  to  reverse  the 
process  of  the  last  half  century  and  become  increasingly  inde- 
pendent in  the  development  of  home  industries  to  produce  prod- 
ucts previously  brought  overseas.  Some  of  these  war  industries 
will  be  found  to  have  a  naturally  permanent  basis.  L'poii  the 
return  of  peace  others  will  naturally  go  down  as  quickly  as  they 
came,  unless  tariffs,  bounties,  and  other  forms  of  national  pro- 
tection and  price  raising  be  more  widely  enforced  as  a  part  of 
a  worldwide  policy  of  national  independence.  This,  unfortu- 
nately for  the  wealth,  comfort  and  peace  of  the  world,  may  quite 
possibly  be  the  case.  Some  of  the  war  industries  will  certainly  be 
protected  either  by  natural  conditions  or  government  aid,  such, 
for  example,  as  the  British  and  American  dye  industries,  the 
American  optical  glass  industry,  the  restored  British  agriculture, 
which  has  natural  resources  and  market  in  favor  of  it.  Among 
the  quickly  perishing  war  industries  we  may  probably  class  most 
of  the  numerous  and  relatively  unsuccessful  attempts  to  produce 
potash  outside  of  Germany. 

The  trade  in  manufactures  will  afford  the  greatest  field   for 


TRADE    DISLOCATIONS    DUE    TO    WAR  115 

probable  readjustment.  England,  France,  Italy,  Germany,  and 
Austria,  will  have  many  good  reasons  for  wishing  and  needing 
to  win  back  their  lost  markets,  lost  to  Japan,  United  States,  and 
the  present  neutrals.  The  point  of  view  that  looks  upon  our 
enemies  or  our  impoverished  allies  as  poor  competitors  after  the 
war  is,  I  believe,  mistaken.  Because  of  their  poverty  they  will 
have  great  need,  and  will  be  compelled  to  do  the  necessary  things 
to  win  trade.  In  that  respect  they  will  have  a  certain  resem- 
blance to  China  and  Japan,  who,  because  of  their  poverty,  are 
such  doughty  competitors  in  the  industries  for  which  they  have 
the  resources.  There  will  be  less  shortage  of  man  power  in 
Eunjpe  than  we  think;  for  despite  the  losses  of  the  war  the 
simpliticatiun  of  consumption  forced  l)y  the  war  will  tend  to 
reduce  the  scale  of  living.  The  speeding-up  and  reorganization 
processes  of  the  war  have  increased  the  rate  of  output.  Many 
new  mechanical  inventions  have  been  made,  so  that  every  man 
killed  or  maimed  is  much  more  than  replaced  Ijv  the  enormous 
imi)rovement  in  mechanical  power,  technical  processes  and  indus- 
trial organization  that  have  come  during  the  war.  As  a  result 
the  Euro|)ean  countries  will  emerge  from  the  war  with  a  greater 
])roducing  power  in  manufactures  and  also  in  agriculture  than 
they  had  at  the  beginning. 

The  new  government  control  of  industry  will  of  necessity  con- 
tinue for  a  time — how  long  a  time  it  is  indeed  interesting  to 
speculate.  The  record  of  the  old  prewar  industrial  system  is 
against  it.  The  complete  inadequacy,  the  gross  inefficiency  of 
individualistic,  unregulated  industry,  when  examined  in  the  light 
of  strong  nationalism  and  war  needs,  has  been  a  great  shock  to 
thinking  people  in  the  Anglo-Saxon  world.  It  should  be  noted 
that  the  war  emergenc}-  has  created  nothing  new  to  take  its  place. 
It  has  merely  borrowed  the  personnel  of  the  old  system  which 
they  have  laid  aside  for  a  time — a  time  of  industrial  truce.  This 
truce  must  last  for  a  time  after  the  war — and  then?  England 
has  already  announced  her  intention  of  continuing  government 
control  for  three  years  after  the  war.  We  may  depend  upon 
it  that  this  time  will  be  utilized  to  the  full  to  develop  the  export 


110  INFLUENCE    OF    THE    GREAT    WAR    ITON    SHIPPING 

trade,  for  which  very  comprehensive  plans  are  already  being  care- 
fully matured.  We  hear  rumors  of  many  C'lerman  plans,  but  our 
knowledge  of  England  is  greater.  For  example,  the  American 
consul  at  London  reports  *  that  the  British  Minister  of  Recon- 
struction has  appointed  a  committee  on  financial  facilities  after 
the  war.  The  chairman  vi  this  committee,  the  president  of 
Lloyd's  Bank,  one  of  the  two  largest  banks  in  Britain,  points  out 
that  while  government  control  may  not  last  after  the  war.  indus- 
trial organization  has  certainly  come  to  stay.  He  is  quite  right. 
As  an  example  of  this  industrial  organization  attention  may  be 
called  to  the  "  BritishManufacturers  Corporation,""  an  organi- 
zation to  promote  export  trade.     Its  avowed  purpose  is  to 

meet  the  needs  of  British  firms  after  the  war  as  regards 
financial  facilities  for  trade.  According  to  its  prospectus, 
the  l>ritish  Trade  Corporation  will  specially  devote  its  ener- 
gies to  the  trade  of  the  Piritish  Empire  in  every  part  of  the 
world.  It  intends  to  lend  to  exporters  on  longer  credit  than 
banks  can  offer,  and  to  open  new  markets  for  British  indus- 
tries, and  to  effect  further  coordination  in  commercial  and 
industrial  undertakings.^ 

It  has  planned  to  have  one  thousand  members  who  will  pay 
$500  to  $1,000  each  per  year.  Its  authorized  capital  is  $'>0,- 
000,000  and  all  shares  offered  have  been  taken.  The  organiza- 
tion will  have  agents  abroad  who  will  receive  ample  compensation 
and  devote  their  whole  time  to  finding  local  firms  who  will  act 
as  agents  for  various  British  manufacturers,  and  doing  all  that 
they  can  in  their  territory  to  promote  British  export.  This  pro- 
posed organization  is  an  admirable  example  of  the  British  way  of 
doing  things  by  private  organizations  freed  from  the  limitations 
of  official  red  tape.  Persons  who  fear  state  socialism  should 
give  more  attention  to  this  private  collectivism  of  Britain.  Thus 
Lloyd's  Register  of  Shipping  has  a  board  of  directors  made  up 

'  Official  Bulletin.  January  9,  1918,  p.  8. 
-"  Ibid.,  January  10.  1918.  p.  3. 

'Gilbert   H.    Montague.    New   York   City:    Cooperation    under   the    IVebb- 
Pomerene  Bill  for  the  Rehabilitation  of  Europe  after  the   War,  p.  12. 


TRADE    DISLOCATIONS    DUE    TO    WAR  117 

of  the  leading  business  men  of  the  shipping  world,  who  regard 
their  unpaid  position  as  directors  of  Lloyd's  Register  as  one  of 
the  greatest  honors  in  their  lives.  The  organization  has  repre- 
sentatives in  many  foreign  ports.  They  are  well  paid  and,  like 
the  servants  of  government,  pensioned  when  they  retire.  It  is 
easy  to  see  the  "  British  Manufacturers  Corporation  "  rapidly 
developing  into  the  same  type  of  efficient  institution,  which,  for 
soundness  of  work,  is  more  respected  than  any  government. 

While  the  British  Trade  Corporation  was  under  consider- 
ation, the  President  of  the  Federation  of  British  Industry, 
speaking  of  the  preparations  necessary  for  conditions  after 
the  war,  said :  "  One  thing  that  has  been  obvious  in  the 
past  has  been  the  harm  done  by  extensive  competition  be- 
tween comparatively  small  firms.  This  must  be  eliminated 
in  the  future." 

In  France  a  similar  enterprise,  under  the  name  of  the 
Association  Xntionalc  d'Expansion  Economiquc,  has  been 
organized  to  promote  the  economic  expansion  of  France  in 
foreign  markets.^ 

Aleanwhile  the  British  Government  is  also  shaking  itself  awake." 
The  Foreign  Office  and  the  Board  of  Trade  which  have  long 
jangled  over  their  authority  in  trade,  have  joined,  forming  a 
joint  intelligence  department  which  will  have  entire  charge  of 
matters  pertaining  to  trade,  and  one  of  the  first  steps  is  to  in- 
crease the  pay  of  consuls  and  attaches. 

The  British  Minister  of  Reconstruction  now  proposes, 
after  the  war.  to  import  raw  materials  required  for  British 
manufactures,  and  to  allocate  them  among  various  estab- 
lishments according  as  the  British  trade  associations  may 
suggest.  His  proposal  includes  plans  under  which  these 
British  trade  associations  shall  survey  their  respective  in- 
dustries, determine  the  equipment  requirements  of  then- 
members,  explore  the  possibilities  of  new  development, 
maintain  a  bureau  of  information  regarding  the  best  means 

"  Gilbert  H.  Montague,  op.  cit. 

"  Official  Bulletin.  January  10,  1918,  p.  8. 


118  l.NTLUtlXCl^    OF    THE    GREAT    WAR    UPON    SIIIPPINT. 

of  production,  and  exchange  data  regarding'  tlie  prices  for 
the  protection  of  consumers. 

Pariianient  already  has  under  consideration  the  Xon- 
Ferrous  Bill,  recently  introduced  by  the  British  (Government, 
which  provides  that  no  one  in  (ireat  I^ritain  shall  deal  in 
copper,  tin,  zinc  and  nickel,  for  a  period  of  live  years  after 
the  war,  unless  he  has  a  license  from  the  government,  and 
that  no  one  who  has  been  a  subject  of  an  enemy  country 
shall  obtain  such  a  license.' 

Meanwhile,  of  course,  the  United  States  and  Japan  are  doing 
the  exporting  because  they  have  less  war  strain  and  therefore 
more  surplus  goods  than  I'ngland.  I  hit  the  record  of  trade 
.statistics  during  the  war  is  a  very  deceptive  basis  to  use  as  a 
gauge  for  what  will  happen  after  the  war.  The  following 
passage  from  official  .\nierican  sources  seems  to  me  to  be 
])eculiarly  suggestive,  alike  in  its  (lescri])tion  of  the  j)resent.  of 
the  past,  and  in  its  inferences  descriptive  of  the  future.  The 
Official  Bulletin  (  Xovembcr  1,  I'.HT,  page  .'» )  quotes  the  U.  S. 
Department  of  Commerce  as  saying: 

Practically  all  the  news  print  paper  that  is  received  by 
Peru.  Bolivia,  and  Ecuador  now  comes  from  the  United 
States.    .    .    . 

Previous  to  the  war  nearly  r»0  per  cent  of  the  paper  im- 
ports of  Peru  came  from  Germany,  :2()  per  cent  from  the 
United  States,  10  per  cent  from  Spain.  France.  Belgium, 
Italy,  and  other  European  countries.  The  principal  factors 
in  the  European  strength  according  to  the  bureau's  report, 
were  lower  prices,  longer  credits,  better  shipping  facilities, 
more  active  selling  campaigns,  willingness  to  produce  the 
goods  desired,  better  packing,  greater  attention  to  detail, 
and  influence  of  European  colonies  engaged  in  the  paper  and 
printing  trades. 

This  passage,  which  sounds  like  a  fearful  arraignment  of  our 
commercial  capacity,  could  be  essentially  duplicated  from  a  hun- 
dred ofificial  sources.     It  is  really  a  statement  of  the  fact  that 

^  Gilbert  H.  Montague,  op.  cit. 


TRADE    DISLOCATIONS    DUE    TO    WAR  119 

before  the  war  we  were  not  in  a  position  to  seek  foreign  trade 
seriously.  Has  the  war  changed  us?  It  is  true  that  the  United 
States  also  has  been  making  rapid  strides  toward  developing  for- 
eign trade.  We  have  improved  our  international  banking  system. 
\\'e  have  organized  a  great  private  corporation  to  promote  for- 
eign trade,  but  more  especially  foreign  investment,  and  we  have 
matched  the  European  countries  by  passing,  April  10,  1918,  the 
very  comprehensive  Webb-Pomerene  Bill,  which  enables  Ameri- 
can' manufacturers  to  do  almost  anything  that  is  needed  to 
develop  exports.     Whatever  is  needed 

can.  under  reasonable  conditions,  and  with  certain  for- 
malities, be  accomplished  under  the  Webb-Pomerene  Bill,  so 
long  as  trade  within  the  United  States  is  not  affected,  and 
so  long  as  there  are  no  unfair  methods  against  some  outside 
American  competitor,  who  also  is  engaged  in  the  American 
export  trade.   ... 

What  are  these  methods  and  arrangements  t 
IMainly  thev  are  onlv  those  methods  and  arrangements 
that  apparentlv  raise  some  question  under  the  anti-trust  laws 
—representation  abroad,  for  instance,  for  groups  of  com- 
petitive American  concerns,  by  common  selling  agencies,  or 
common  sales  branches,  or  other  cooperative  selling  organi- 
zations in  foreign  markets,  and  all  manner  of  contracts  or 
understandings  between  competitive  American  concerns,  re- 
specting the  apportionment  of  orders,  profits,  losses,  business, 
or  terrltorv.  or  agreement  regarding  prices  ^"foreign 
markets,  upon  anv  basis  whatever,  when  trade  within  the 
United  Sta  es  is  not  affected,  and  when  no  un  air  method  of 
petition  is  practiced  against  some  outside  Americ^.  com- 
petitor who  also  is  engaged  in  the  American  export  trade. 

Whatever  results  may  follow  this,  the  British  at  least  fear  us, 
but  perhaps  thev  overestimated  the  menace  thus  described  by  the 
Buenos  Aires  correspondent  of  a  British  journal: 

Directlv    the    war    is    over,    it    is    argued,    and    British 
traders   are   able  to   deliver  the  goods   as  heretofore,   the 

•  Gilbert  H.  Montague,  op.  cit. 


120  INFLl'ENCK    OF    THK    C.RKAT    WAR    IPON    SHIPPING 

Yankee  will  disappear.  I  am  diihious.  The  Xorth  Ameri- 
can is  firmly  establishing  himself  in  this  matter.  Every 
steamer  brings  down  several  keen  business  men,  and  these 
men,  who  used  to  be  mere  travelers,  are  now  Ijecoming  resi- 
dents. It  is  hardly  likely  that  they  will  be  shaken  off  with 
cunsummate  ease  after  the  war  is  over.  They  are  making 
money  for  a  rainy  day ;  they  are  learning  rapidly  by  experi- 
ence, and  Slaving  banks  behind  them.  It  would  l)e  really 
unwise  to  count  on  their  disappearance  after  the  war.  It 
is  my  opinion  that  they  will  be  greater  rivals  than  the 
Germans.^ 

But  it  should  be  remembered  that  we  have  not  been  a  trading 
people  and  that  we  have  had  little  practice  in  the  real  art  of 
foreign  tr;ide  during  this  present  war.  If  there  is  any  art  that 
has  not  been  needed  in  the  foreign  trade  during  the  war,  it  is 
the  art  of  salesmanship.  For  the  present  it  may  be  called  a  lost 
art  or  at  least  a  slumbering  art.  In  times  of  peace  the  foreign 
market  has  been  hard  to  cultivate.  Experts  have  persuaded  cus- 
tomers to  buy.  In  this  period  of  war  diplomats  l>eg  for  goods, 
special  eml^assies  cross  the  seas  and  camp  for  months  at  Wash- 
ington trying  to  persuade  us  to  let  the  goods  that  lie  in  their 
ships  go  forward.     Antl  they  often  beg  in  vain. 

We  may  want  to  hold  some  of  our  newly  won  war  trade,  but 
the  holding  will  not  be  easy.  The  most  important  single  factor 
in  the  development  and  prosecution  of  foreign  trade  is  the  trade 
organization,  a  thing  which  statistics  do  not  touch.  The  organi- 
zation of  international  trade  in  brief  is  this:  A  wholesale  firm 
in  ^Melbourne,  Buenos  Aires,  or  Rio  Janeiro  has  dealings  with  two 
or  three  hundred  retail  merchants  scattered  over  its  own  city 
and  in  many  inland  towns.  The  relationship  is  largely  a  per- 
sonal one.  The  retailer  know-s  somebody  connected  with  the 
wholesale  house.  The  wholesale  house  has  purchasing  branches 
in  Xew  York,  London,  Paris,  Hamburg,  or  Berlin.  Its  real 
headquarters  may  be  in  any  of  the  cities  mentioned.  It  buys 
goods  wherever  it  can  secure  them,  and  sends  them  out  on  atiy 
steamer  that  offers  service.     Sometimes  these  firms  even  own  or 

'  Fair  play.  May  11.  1916.  p.  751. 


TRADE    DISLOCATIONS    DUE    TO    WAR  121 

charter  steamers  for  their  own  business  and  take  goods  for  others 
also. 

What  has  the  war  done  to  this  organization?  Statistics  do 
not  show.  As  a  matter  of  fact,  German  firms,  when  German 
steamers  were  tied  up  in  1914,  promptly  chartered  Norwegian 
ships.  They  even  chartered  British  ships  which  were  insured  in 
the  liritish  War  Risk  Bureau,  and  which  carried  British  or 
American  or  French  goods  to  the  German  firms  with  the  many 
local  connections.  Later  came  the  black  list,^  which  was  of 
course  met  by  camouflage  in  change  of  name.  The  sign  of 
Hans  Mittendorf  came  down  from  the  Argentine  warehouse,  and 
in  its  place  one  read  that  Alfonso  Diez  conducted  the  import 
business,  but  Hans  was  still  inside.  Alfonso  had  been  a  trusted 
clerk.  1  lans  became  a  trusted  and  obeyed  manager  for  Alfonso, 
and  the  same  salesmen  visited  the  Argentine  back  country  and 
they  sold  any  goods  they  could  get  and  they  will  in  all  probability 
be  there  when  peace  is  declared.  In  China  in  1915,  German 
firms,  no  longer  able  to  get  German  goods,  were  handling  Eng- 
lish, l-'rench,  .American,  and  even  selling  Chinese  goods  to  the 
Chinese.  The  United  States  has  of  course  had  an  undisturbed 
chance  to  buihl  up  trade  organization  during  the  war,  but  the 
stimulus  of  competition  has  been  lacking,  and  it  would  probably 
be  overoptimistic  to  think  that  we  had  in  that  time  developed  any 
superior  it  V  over  Europe.  German  interests  at  this  day  have  title 
to  an  uncanny  amount  of  property — vital  raw  materials  in  for- 
eign countries,  some  of  which  they  are  reported  to  have  secured 
since  the  war  began. 

The  trade  in  the  decade  after  the  war  will  be  one  in  which  it 
seems  inevitalile  that  competition  will  be  keener  than  it  has  ever 
been  before,  with  every  prospect  of  more  government  aid  than  it 
has  ever  had  before.  It  should  be  remembered  that  in  this  matter 
of  extending  government  aid  to  industry,  Germany  has  the  mas- 
ter hand.  Government  aid  means  a  favorable  price  list.   After  the 

'  When  one  considers  the  way  that  the  American  at  home,  using  the  device 
of  incorporatinn.  has  for  decades  openly  flouted  the  plain  will  of  the  people 
and  the  lawmakers,  it  is  easy  to  believe  that  a  black  list  is  a  very  weak  tool 
with  which  to  break  up  a  commercial  organization  in  a  foreign  land. 


122  INFLUENXE    OF    THE    GREAT    WAR    UPON    SHIPPING 

war  the  price  list,  salesmanship,  the  desire  to  please,  credit  and 
banking  facilities — especially  the  price  list  and  the  desire  to 
please — will,  as  in  the  prewar  period,  win  most  of  the  traffic.  In 
these  respects  the  European  lower  wai^e.  as  in  the  past,  particu- 
larly tlie  lower  wage  of  the  continental  peoples,  promises  to  give 
them  ( as  in  the  past )  an  advantage.  Certainly  the  young  men 
of  Germany  will  continue  to  work  in  South  America  for  less 
than  the  young  men  of  Xorth  .\merica.  And  unless  the  English 
and  Americans  change  their  ways,  they  will  not  Ix;  loved  in  for- 
eign parts  any  more  in  the  future  than  they  have  been  in  the 
past,  and  in  many  countries  they  will  have  no  sentimental  advan- 
tage. It  is  unt)flicially  repijrted  that,  owing  largelv  to  the  Rus- 
sian dislike  for  the  English,  over  three-fourths  of  the  <'.,U()()  Eng- 
lish hrms  in  Russia  were  driven  out  in  less  than  a  year  after  the 
overturning  of  the  Czar. 

In  making  predictions  for  postwar  trade  developments,  we 
have  no  reason  to  expect  any  permanent  results  from  the  war, 
e.xcept  where  there  has  been  some  permanent  change  in  the  rela- 
tive powers  of  the  competitors.  The  fundamental  conditions 
underlying  trade  are  resource  conditions.  These  will  have 
changed  but  little.  The  whole  world  will  have  reduced  its  capital. 
Europe  more  than  .America.  That  merely  means  that  Europe 
will  have  the  same  relation  to  the  world  market  that  the  unem- 
ployed man  at  the  gate  has  upon  the  labor  market — that  of  a 
price  cutter.     In  the  words  of  Otto  H.  Kahn : 

\\'e  shall  have  to  meet,  after  the  return  of  peace,  both  in 
our  own  country  and  abroad,  the  onset  of  the  business  men 
of  Europe,  spurred  on  by  dire  necessity  to  put  forth  their 
utmost  efforts,  trained  to  discipline,  cooperation  and  in- 
ventiveness in  the  cruel  school  of  years  of  desperate  war 
upon  their  own  soil  or  at  their  very  door,  backed  by  the  full 
power  of  their  respective  governments  and  the  laws  of  their 
countries. 

It  is  easy  to  think  that  these  spectacular  changes  of  today  are 
revolution  when  thev  are  merelv  rotation.     Go  back  to  the  trade 


TRADE    DISLOCATIONS    DUE    TO    WAR  123 

literature  of  IDOO  and  1001  when  Britain  was  busy  with  the 
Boer  War  and  a  coal  strike  was  on,  and  you  can  read  no  end 
of  prophetic  nonsense  based  on  the  assumption  that  we  had  cap- 
tured the  world's  trade  forever  because  we  had  made  a  few  sales 
while  England  was  temporarily  engaged.  Trade  depends  chiefly 
on  the  delivered  price  of  the  satisfactory  goods.  This  means 
factory  cost,  plus  ocean  freights,  plus  banking,  plus  insurance, 
plus  the  organization  to  sell,  plus  the  willingness  to  please.  The 
evidence  is  not  yet  in  hand  to  show  that  we  in  America  will  have 
any  new  relative  superiority  over  Europe  in  any  one  of  these 
six  counts.  It  is  quite  likely  that  the  heavy  borrowings  of  Europe 
in  this  country  will  put  us  on  an  inflated  money  basis  that  will 
result  in  a  high  price  level  that  will  leave  the  export  advantage 
with  Europe  until  we  ccjme  down  from  our  high  horse.  We  will 
be  safer  if  we  merely  regard  the  war  in  its  foreign  trade  aspects 
as  a  mel(jn  that  has  been  cut,  to  be  followed  by  the  lesser  melon 
of  helping  reconstruct  devastated  Europe,  and  then — competition. 

CIreat  lalxjr  unrest  and  discontent,  serious  industrial  dis- 
placements, large  financial  adjustments,  enormous  tax 
burdens,  and  the  depressing  anxiety  resulting  from  cata- 
clvsmic  changes  and  abysmal  uncertainty,  will  then  weigh 
heavilv  upon  Europe,  and  presumably  be  shared  in  some 
degree  by  America. 

Purchases  in  .America  after  the  war,  for  account  of  Euro- 
pean reconstruction,  will  undoubtedly  be  more  or  less  cen- 
tralized, either  in  government  agencies,  or  in  unofficial  but 
noncompeting  buying  agencies  for  foreign  interests.^ 

We  see  (juite  as  much  in  the  public  press  now  about  tariff  which 
is  a  trade  barrier  as  we  do  about  the  promotion  of  trade.  Any 
discussion  of  foreign  trade  should  reckon  with  the  fact  that  the 
average  American  does  not  seem  to  have  the  mind  or  stomach  to 
appreciate  and  act  on  the  fact  that  foreign  trade  consists  in  buy- 
ing as  much  as  you  sell.  As  a  nation  we  seem  to  glory  in  the 
idea  of  a  sale,  and  shudder  at  the  idea  of  a  purchase— which 
really  gives  us  something. 

'  Gilbert  H.  Montague,  op.  cit. 


CHAPTER  V 
Government  Aid  to  Shipping 

Tun  Universality  of  Government  Aid  to  Shipping 

It  scarcely  needs  argument  to  show  tliat  tlic  cost  of  carriage 
of  ocean  freight  varies  in  (MtTerent  countries.  Rates  of  wages 
dilTer,  costs  of  buikMng  the  ship  (hffer,  costs  of  food,  coal  and 
.sui)j)lics  differ,  therefore  the  costs  of  running  the  completed 
ship  must  also  differ.  If  shipowners  and  business  men  were  let 
entirely  alone  by  governments,  we  would  have  nearly  all  the 
world's  carrying  done  by  a  few  peoples,  and  most  nations  would 
be  without  a  first  class  ship.  Now  add  to  this  situation  the  fact 
that  a  nation  without  ships  may  find  itself  at  the  mercy  of  for- 
eigners, and  wc  see  the  cause  for  worldwide  effort  at  encourag- 
ing shipping.  In  this  attempt  at  some  degree  of  maritime  in- 
dependence, temporary  (jr  j)ermanent.  many  devices  have  been 
tried.  Every  nation  of  importance  has  done  something.  Before 
we  can  consider  a  postwar  shipping  policy,  before  we  examine 
the  shipping  policy  during  the  war.  we  should  review  the  leading 
facts  and  principles  of  government  aid  to  shipping  that  were  in 
force,  before  the  war  made  it  necessary  for  the  nations  to  take 
control  of  shipping  and  virtually  make  it  a  service,  indeed  an  arm 
of  the  government. 

To  get  together  complete  information  on  this  wide  reaching 
subject  is  of  itself  a  lengthy  investigation,  and  we  are  fortunate 
in  that  it  has  recently  been  done  in  a  thorough  manner  by  Mr. 
Grosvenor  M.  Jones,  Commercial  Agent  in  the  U.  S.  Depart- 
ment of  Commerce,  and  published  as  Xo.  119,  Special  Agent 
Series,  Department  of  Commerce,  Bureau  of  Foreign  and  Do- 
mestic Commerce.  Government  Printing  Office.  Washington, 
IDIG.  Owing  to  its  recent  date  and  satisfactory  character  the 
material  in  this  chapter  is  very  largely  abstracted  and  excerpted 

124 


GOVERNMENT    AID    TO    SHIPPING  125 

from  Mr.  Jones'  report  to  which  I  wish  here  to  give  all  possible 
credit. 

Definition  of  Terms 
In  this  chapter  ^  "  subsidy  "  and  "  bounty  "  are  treated  as 
synonymous  terms  and  are  used  to  describe  grants  that  are  made 
without  any  requirement  of  special  service  to  the  government. 
The  term  "  subvention,"  on  the  other  hand,  is  used  to  describe 
grants  that  are  conditioned  upon  the  performance  by  the  grantee 
of  certain  prescribed  services  for  the  state,  such  as  the  rapid 
transportation  of  mails  on  regular  schedules  and  the  construc- 
tion of  merchant  ships  according  to  plans  of  the  naval  authorities 
for  use  as  auxiliary  cruisers  and  transports  in  time  of  war. 

Forms  of  Government  Aid 
State  aid  to  merchant  shipping  may  take  a  number  of  forms. 
In  the  commonly  accepted  version  of  the  term  government  aid 
means  the  payment  of  bounties,  subsidies,  or  subventions,  but 
its  scope  is.  in  fact,  much  ])roader.  since  substantial  assistance 
is  often  rendered  by  the  grant  of  privileges  whose  benefits  can 
not  be  computed  in  terms  of  money. 

Government  aid  is  here  treated  under  two  broad  heads,  namely 
direct  and  indirect  aid.  Under  the  head  of  indirect  aid  are  con- 
sidered (a)  reservation  of  coasting  trade;  (b)  exemption  from 
import  duties  on  shipbuilding  materials;  (c)  admission  of  for- 
eign built  vessels  to  national  registry;  (d)  preferential  railway 
rates;  (e)  loans  to  shipowners;  (f)  reimbursement  of  port  dues, 
etc.;  (g)  reimbursement  of  canal  dues,  and  (h)  other  indirect 
aid.  such  as  exemption  from  taxation,  etc.  Under  the  head  of 
direct  aid  are  (a)  postal  subventions;  (b)  bounties  or  subsidies, 
and  (c)  subventions  to  foreign  steamship  lines. 

Indirect  Aid 
(a)    Reservation  of  Coasting  Trade. 

In   the  case  of   many   countries  the   extent  of   the   coasting 
trade  is  so  limited  that  its  monopolization  by  ships  flying  the 

'  While  the  present  tense  is  used  in  this  chapter  it  refers  in  many  cases 
to  conditions  that  prevailed  before  the  war  suspended  them. 


120  INFLUENCE    OF    THE    GREAT    WAR    IPOX    SHIPPING 

national  flag  is  of  comparatively  little  advantage  to  such 
Nhipping.  Of  the  leading  maritime  countries  Great  Britain 
is  distinguished  by  the  fact  that  the  extensive  coasting  trade  of 
the  British  Isles  and  the  so-called  imperial  coasting  trade  (the 
trade  between  the  mother  country  and  the  colonies  and  between 
the  colonies  themselves)  have  been  open  to  the  ships  of  all  na- 
tions since  about  iS.'iO.  when  the  navigation  acts  were  repealed. 
In  recent  years,  however,  consiilcratitm  has  been  given  to  a  pro- 
posal that  the  British  and  imperial  coasting  trade  be  closed  to 
.ships  of  nations  denying  British  ships  reciprocal  privileges  and  to 
subsidized  foreign  ships,  exce])t  upon  j)ayment  of  an  indemnity.* 
The  coasting  trades  of  Norway  and  Sweden  are  o|)en  to  the 
shij)s  of  all  other  nations  except  Sweden  and  Norway,  respec- 
tively. The  coasting  trade  of  Denmark  is  open  without  (|uali- 
tication.  The  configuration  of  the  coasts  of  these  countries  and 
their  sparse  population  make  their  coasting  trade  of  little  value 
in  the  development  of  a  merchant  marine.  In  fact,  both  Nor- 
way and  Sweden  find  it  necessary  to  subsidize  a  number  of  coast- 
wise lines  to  insure  regular  trade  and  mail  communications. 

The  coasting  trade  of  (iermany,  while  not  important,  is  largely 
held  by  German  ships,  but  this  is  not  a  result  of  legi.slation.  since 
nominally,  the  coasting  trade  of  (iermany  is  open  to  the  ships 
of  other  nations  that  grant  reciprocal  privileges  to  (ierman 
ships. 

Both  the  meagre  coasting  trade  of  the  Netherlands  proper  and 
the  extensive  trade  between  the  Netherlands  and  the  Dutch  lu'ist 
Indies  are  open  to  the  ships  of  nations  that  grant  reciprocal 
privileges  to  Dutch  ships. 

The  United  States.  France,  Italy,  .\ustria-Hungarv.  Spain, 
and  Belgium,  among  the  more  important  maritime  countries,  have 
long  reserved  their  coasting  trade  to  national  ships,  while  Japan 
has  reserved  all  of  its  coasting  trade  to  its  own  ships  onlv  since 
1910. 

Russia   has   long  reserved   the   trade   between   Russian   ports 

'  Report  of  British  Board  of  Trade  Select  Committee  on  Steamship  Sub- 
sidies, December  3,  1902,  p.  .\.\ii. 


GOVERNMEXT    AID    TO    SHIPPING  127 

on  the  same  sea  for  Russian  ships,  but  it  was  not  until  the  issu- 
ance of  the  royal  decree  of  May  29,  1897,  that  the  trade  between 
all  Russian  ports  was  restricted  to  Russian  ships. 

ib)  Exemption  from  Import  Duties  on  Shipbuilding  Materials. 

All  shipbuilding]^  materials  have  been  exempt  from  customs 
duties  in  England  since  the  adoption  of  the  free  trade  policy. 
Such  materials  have  been  exempt  for  many  years  also  in  Ger- 
many and  the  Netherlands.  Belgium  has  granted  free  admis- 
sion to  shijjbuilding  materials  since  April  12,  1804.  All  ship- 
building materials  have  lieen  on  the  free  list  in  the  United  States 
since  the  tariff  act  of  1909,  although  many  such  materials  had 
been  exempt  from  duties  since  me  tariff  act  of  1894. 

France.  Italy  and  Spain  levy  duties  on  materials  used  in  the 
C()n>tructi(m,  repair  and  equipment  of  ships,  despite  the  fact 
that  their  inm  and  steel  industries  can  not  under  present  condi- 
tions compete  with  those  of  Great  Britain  and  Germany,  and 
many  products  of  these  industries  must  be  imported.  These 
countries  wish,  however,  to  protect  domestic  industries,  even 
though  they  must  pay  bounties  to  shipbuilders  to  offset  the 
duties.  The  fact  that  these  countries  levy  import  duties  on  ship- 
building materials  must  be  borne  in  mind  when  reference  is 
made  to  the  fact  tiiat  they  pay  lx)unties  on  ship  construction. 

The  Scandinavian  countries  impose  import  duties  on  ship- 
building materials  but  get  around  the  difficulty  in  another  way 
by  allowing  drawbacks.  Sweden  allows  a  drawback  of  duties 
actually  paid  on  materials  used  in  the  construction  in  Swedish 
vards  of  any  ship  of  40  tons  and  over.  Denmark  allows  a  draw- 
back equal  to  not  more  than  2  per  cent,  of  the  selling  price  of 
all  ships  built  in  Danish  yards.  And  Norway  makes  in  lieu  of 
a  drawback  a  grant  amounting  to  2  per  cent  of  the  selling  price 
of  new  steamers  of  more  than  300  gross  tons  and  to  1  per  cent 
on  new  steamers  of  50  to  300  tons  and  sailing  vessels  of  50  tons 
and  over,  as  well  as  a  grant  equal  to  1.5  per  cent  of  the  cost  of 
repairs  on  vessels  of  300  tons  and  over,  if  the  cost  is  at  least 
l.nOO  kroner  ($2G8). 


128  IN'FLUENCE    OF    THE    GREAT    WAR    L'POX    SHIPPING 

(c)  Admission  of  Foreign  Built  I'csscls  to  National  Registry. 

For  many  years  no  country  of  importance  with  the  exception 
of  the  United  States  has  required  that  ships  flying  the  national 
flag  shall  be  of  domestic  construction,  although  practically  every 
country  has  made  this  requirement  in  the  case  of  steamships 
receiving  postal  subventions. 

England  has  granted  registers  to  foreign  built  ships,  in  (jther 
words,  has  pursued  the  "  free  ship  "  policy  since  about  1S.'>0.  At 
that  time  wooden  sailing  vessels  were  predominant  and  these 
could  be  secured  more  cheaply  in  the  United  States,  which  had 
larger  supj)lies  of  timber  and  naval  stores  and  a  more  efficient 
shipbuilding  industry.  As  a  result  of  this  free  ship  policy  the 
merchant  marine  of  Great  Britain  received  large  accessions 
during  the  Civil  War,  when  more  than  750,000  tons  of  American 
shipi)ing  secured  foreign  registers  to  avoid  capture  or  destruc- 
tion by  Southern  raiders. 

Germany  has  also  pursued  the  free  ship  policy,  but  at  the 
same  time  has  given  much  encouragement  to  the  domestic  pro- 
duction of  ships  by  making  low  railroad  rates  on  materials 
transported  from  the  iron  and  steel  manufacturing  centers  in 
the  interior  to  the  shipyards  along  the  coast  and  by  requiring 
that  subventioned  steamers  should  be  of  domestic  construction. 

The  United  States  has  adopted  the  free  ship  policy  in  full 
only  since  the  outbreak  of  the  present  war  in  Europe  and  only 
in  respect  to  ships  engaged  in  the  overseas  trade.  However,  a 
step  in  this  direction  was  taken  in  the  Panama  Canal  act  of 
August  24,  1912.  which  admitted  to  American  registry  sea- 
worthy foreign  built  ships  not  more  than  five  years  old.  The 
policy  pursued  by  the  United  States  from  1702  down  to  1914  of 
granting  registers  only  to  American  built  ships  resulted  from 
a  desire  to  foster  the  domestic  shipbuilding  industry.  There  is 
no  question  that  this  policy  has  been  of  some  assistance  in  main- 
taining the  industry,  for  there  has  been  a  large  and  growing 
demand  for  ships  for  the  coastwise  trade  which  is  restricted  to 
American  built  ships  and  has  developed  rapidly.  If,  however, 
the  shipbuilding  industry  of  the  United  States  had  been  obliged 


GOVERN M EXT    AID    TO    SHIPPING 


129 


to  depend  upon  orders  for  ships  in  the  overseas  trade,  it  would 
have  decHned  long  since  because  of  the  higher  costs  of  Ameri- 
can ship  construction.  It.  therefore,  appears  that  we  have  had 
little  gain  from  our  policy  of  exclusion  of  foreign  built  vessels 
for  overseas  trade. 

One  of  the  strongest  arguments  against  various  subsidy  bills 
that  have  l)een  proposed  in  the  past  twenty  years  has  been  the  fact 
that  the  bills  jjrovided  for  navigation  bounties  that  would  have 
been  to  a  large  degree  bounties  on  construction,  since  they  were 
intended  to  offset  the  higher  depreciation  and  interest  charges 
of  the  higher  priced  American  built  ships,  as  well  as  the  higher 
operating  costs.  Such  legislation  appeared,  therefore,  to  grant 
an  artificial  and  unwarranted  stimulus  to  the  construction  of 
overseas  ships  and  to  have  been  prepared  in  the  interest  of  the 
shipbuilder  rather  than  in  the  interest  of  the  shipowner  or  of 
the  exporter. 

(d)   Preferential  Raihvay  Rates. 

Assistance  in  the  form  of  lower  rail  rates  on  goods  shipped 
over  specified  steamship  lines  is  a  practice  that  has  l^een  followed 
in  Germanv  with  respect  to  the  German  Levant  and  the  German 
East  Africa  Lines  since  the  years  181)0  and  1895,  respectively. 
These  differentials  have  a  double  purpose,  since  by  enabling 
German  manufacturers  to  sell  their  products  at  lower  prices 
in  the  countries  reached  by  these  lines  they  develop  German 
trade  and  at  the  same  time  increase'  the  traffic  on  the  preferred 
steamship  lines. 

France,  like  Germanv.  has  made  use  of  differential  export 
railroad  rates  to  assist  in  the  development  of  traffic  on  certain 
French  steamship  lines,  as  well  as  to  promote  the  foreign  trade 
of  France.  The  United  States  vice  consul  at  Havre  reported 
in  llti;;.  that  the  Orleans  Railway  gives  reduced  rates  on  goods 
shipped  to  French  West  Africa  and  to  South  America,  and  a 
special  reduction  of  20  per  cent  on  goods  shipped  to  Newhaven, 
England,  from  St.  Xazaire  by  vessels  of  the  Compagnie  Generale 
Tratisatlantique :  that  the  Western  Railway  makes  a  special  rate 


130  IXFLUENCE    OF    THE    GREAT    WAR    IPoN    SHIPPING 

on  shipments  to  Xew  York  on  the  freight  vessels  of  the  Com- 
paynic  Gcncralc  Transatlantiquc ;  and  that  the  Paris-Lyons-Medi- 
terranean  Railway  makes  special  rates  for  goods  shipped  to  the 
Levant  and  the  Far  Kast  by  specified  French  lines. 

Both  Germany  and  France  have  a  general  system  of  export 
rail  rates,  as  well  as  a  special  system  of  rates  for  goods  carried 
by  specified  steamshij)  lines.  The  general  system  is  to  be  found 
also  in  the  United  States,  Xorway,  Sweden.  Denmark,  Belgium, 
the  Netherlands  and  Spain.  In  the  United  States  it  is  not  a 
special  stimulus  to  shipping  except  tliat  it  amounts  t(j  a  bonus 
by  the  railway  to  all  export  of  inland  goods  taken  to  port  bv  rail. 

(V)  Loans  to  Shipowners. 

The  policy  of  granting  loans  to  shipowners  at  low  rates  of 
interest  or  without  interest  was  begun,  it  is  believed,  bv  Austria. 
A  contract  made  on  July  2").  ISIH.  l)etween  the  .Austrian  Gov- 
ernment and  the  Austrian  Lloyd  Steamship  Co.  provided  that 
the  latter  should  receive  a  government  loan  of  1,500.000  florins 
($()0;).000)  for  the  construction  of  new  steamers,  the  same  to 
be  available  in  three  equal  amounts  and  to  be  repaid  without 
interest  in  five  yearly  instalments,  beginning  January  2.  1!»02. 

The  only  instance  of  a  loan  to  a  steamship  company  by  the 
British  Government  was  the  loan  made  to  the  Cunard  Steamship 
Co.  under  the  mail  and  admiralty  subvention  contract  of  r.)0:3. 
Under  this  contract  the  British  Government  loaned  the  steam- 
ship company  £2.600.000  ($12,052,900)  for  the  building  of  two 
steamers  (the  Lusitania  and  the  Maurctania)  that  should 
be  faster  than  any  afloat  and  suitable  for  the  use  of  the 
Admiralty.  The  loan  was  made  at  the  rate  of  '1%  per  cent, 
which  is  about  2  per  cent  lower  than  the  rate  at  which  the  com- 
pany could  have  borrowed  a  similar  amount  in  the  open  market. 
Representatives  of  the  company  have  stoutly  averred  that  the 
extra  cost  of  the  ships  and  their  operation  quite  offset  the  ad- 
vantages. The  government  has  now  had  years  of  war  service 
by  the  Maurctania. 

Since  the  beginning  of  the  present  year  the  French  Govern- 


GOVERNMENT    AID    TO    SHIPPING  131 

ment  has  considered  a  plan  to  increase  the  French  merchant  ma- 
rine by  providing  for  government  loans  to  shipbuilding  enter- 
prises. A  bill  presented  to  Parliament  on  January  14,  1916, 
authorized  an  appropriation  of  100,000,000  francs  ($19,300,- 
000 )  to  be  used  in  making  loans  during  the  war  and  for  a  period 
of  12  months  thereafter.  The  bill  provides  that  the  interest  on 
these  loans  should  be  calculated  at  the  rates  charged  by  the  Bank 
of  France  for  loans  on  securities,  and  that  the  loan  should  not 
exceed  TO  per  cent  of  the  purchase  price  of  vessels  bought  by 
steamship  companies  having  a  fleet  of  20,000  tons  or  over  and 
so  per  cent  in  the  case  of  companies  having  smaller  fleets. 

(/)  Rcitnbiirsoncnt  of  Port  Dues,  etc. 

Denmark  and  Belgium  are  the  only  important  countries  that 
have  extended  aid  to  shipping  by  granting  exemptions  from,  or 
making  reimbursement  of.  port  dues. 

For  many  years  prior  to  the  war  in  Europe,  Belgium  reim- 
bursed the  North  German  Lloyd,  the  Kosmos  Line,  and  the 
L'nited  Steamship  Company  of  Copenhagen  for  all  pilotage  fees, 
port  dues,  etc.,  paid  to  Belgian  and  Dutch  officials  in  getting  to 
Belgian  ports. 

(g)  Reimbursement  of  Canal  Dues. 

The  policv  of  granting  indirect  aid  to  shipping  by  reimburse- 
ment of  canal  dues  was  instituted  by  Russia  in  1879.  This 
practice  has  been  extended  from  time  to  time  and  now  provides 
for  the  reimbursement  of  the  full  amount  of  the  canal  dues  paid 
by  Russian  steamers  bound  for  or  sailing  from  any  Russian  port 
in  the  Far  East,  and  for  a  reimbursement  of  two-thirds  of  the 
full  dues  paid  by  Russian  steamers  bound  for  or  sailing  from 
ports  on  the  Indian  Ocean  and  non-Russian  ports  on  the  Pacific 
Ocean.  In  the  period  from  1^79  to  1900  the  Russian  Govern- 
ment expended  approximately  $4,400,000  in  reimbursement  of 
Suez  Canal  dues. 

The  Austrian  Government  makes  a  reimbursement  of  Suez 
Canal  dues  paid  by  the  steamers  of  the  Austrian  Lloyd.     This 


132  INFLUENCE    OF    THE    GREAT    WAR    I'PON    SHIPPING 

policy  is  believed  to  have  been  instituted  under  the  mail  subven- 
tion contract  of  July  lM,  1SJ>1.  The  benefits  conferred  by  this 
form  of  indirect  aid  may  be  seen  from  the  fact  that  in  the  period 
from  lixn  to  1!)10  the  amounts  paid  annually  to  the  Austrian 
Lloyd  Steamship  Company  in  reimbursement  of  canal  dues 
ranc]^ed  from  $;5!»r..:)Sr)  to  $4{»2.r)00. 

The  policy  of  making  reimbursement  of  Suez  Canal  dues  paid 
by  French  steamships  was  instituted  in  the  contract  made  on 
December  :5().  1!>11,  with  the  CoDipagnic  dcs  Mcssagcrics  Mari- 
times. 

(h)  Exemption  from  Taxation. 

This  form  of  indirect  aid  has,  so  far  as  can  be  ascertained, 
been  granted  only  in  the  Kingdoms  of  Austria  and  Hungary. 
The  practice  was  first  introduced  in  Austria  in  the  law  of  June 
18,  1890,  which  granted  an  exemption  from  income  and  trade 
taxes  on  all  iron  or  steel  vessels  engaged  in  ocean  voyages. 

The  laws  of  the  State  of  New  York  exempt  from  all  taxation 
for  State  and  local  purposes  all  American  owned  ships  registered 
at  any  port  in  the  State  if  engaged  in  the  foreign  trade  of  the 
United  States.  Corporations  owning  such  shi])s  are  exempt  until 
December  31,  1922.  from  all  taxation  upon  their  capital  stock, 
franchises  and  earnings. 

Alabama  exempts  ships  engaged  in  foreign  commerce  from 
taxation,  while  the  State  of  Washington  exempts  all  ships,  built 
or  in  process  of  construction,  in  the  coastwise  as  well  as  in  the 
foreign  trade  of  the  United  States. 

Direct  Aid 

{a)  Postal  Subventions. 

The  granting  of  postal  subventions  to  steamship  lines  ante- 
dates the  bounty  or  subsidy  system  and  is  in  more  general  use 
throughout  the  world.  The  leading  maritime  nation  of  the 
world.  Great  Britain,  was  probably  the  first  to  adopt  the  policy 
of  paying  subventions  for  the  transportation  of  mail,  the  first 


GOVERNMENT    AID    TO    SHIPPING  133 

contract  of  this  character  being  the  contract  made  in  1838  with 
the  Peninsular  Company  for  the  transportation  of  mails  between 
England,  Spain  and  Portugal.  About  this  period  also  the  first 
contracts  with  the  Cunard  Line,  the  Royal  Mail  Steam  Packet 
Co.,  and  the  Pacific  Steam  Navigation  Co.  were  entered  into. 

The  United  States  and  France  soon  followed  the  example  of 
Great  Britain.  The  first  United  States  contracts  were  made  in 
1847,  and  were  with  the  Ocean  Steam  Navigation  Co.  for  serv- 
ice between  New  York  and  Bremen  and  New  York  and  Havre, 
and  with  E.  K.  Collins  for  a  service  between  New  York  and  Liv- 
erpool. The  first  formal  mail  contract  made  by  the  French  Gov- 
ernment was  in  1851,  and  was  with  the  Compagnie  Gcncrale 
Transathintiquc. 

Germany  did  not  adopt  the  policy  of  paying  postal  subven- 
tions until  188G,  when  a  contract  with  the  North  German  Lloyd 
was  concluded.  At  the  present  time  the  payment  of  postal  sub- 
ventions is  the  only  form  of  direct  financial  assistance  that  has 
been  maintained  by  the  German  Government. 

The  purpose  of  mail  subvention  contracts  is  primarily  to  en- 
courage the  maintenance  of  fast  mail  services  on  regular  routes 
and  schedules.  In  many  instances  a  motive  of  almost  equal 
weight  is  that  of  maintaining  the  fastest  possible  communica- 
tion between  the  mother  country  and  her  colonies.  Incidentally 
a  third  object  is  commonly  achieved,  namely,  that  of  providing 
vessels  suitable  for  auxiliary  cruisers  and  transports  in  time  of 
war,  and,  in  many  cases,  a  fourth  object,  namely,  that  of  foster- 
ing the  domestic  shipbuilding  industry  by  requiring  that  the  sub- 
ventions shall  be  paid  only  to  domestic  built  ships. 

In  many  cases  the  financial  aid  granted  by  the  mail  contracts 
may  be  thought  to  be  in  excess  of  the  cost  of  the  service  actually 
rendered,  but  it  should  be  remembered  (1)  that  subventioned 
ships  are  required  to  operate  at  fast  speed,  which  is  dispropor- 
tionately more  expensive  than  operation  at  moderate  speed;  (2) 
that  the  operation  of  vessels  on  fixed  routes  and  on  fixed 
schedules  often  prevents  the  vessels  from  receiving  full  cargo 
and  precludes  a  change  of  route  to  suit  the  changing  conditions 


134  INFLUENCE    OF    THE    GREAT    WAR    UPON    SIIII'PIXO 

of  trade;  and  ('j)  that  most  of  the  mail  steamers  are  constructed 
and  equipped  in  a  special  manner  to  fit  them  for  use  as  auxiliary 
cruisers  and  transports  in  time  of  war  and  are  subject  to  the  call 
of  the  naval  authorities  on  short  notice. 

The  original  grants  made  to  the  Cunard  Line  by  the  British 
Government  were  large  and  probably  contained  a  large  element 
of  bounty.  At  that  time  England  and  the  United  States  were 
keen  rivals  for  supremacy  on  the  seas,  particularly  in  the  trans- 
atlantic trade.  The  steamship  was  then  largely  an  experiment 
and  the  operation  of  steamships  was  "  an  infant  industry  " 
which  required  protection.  The  purpose  of  the  large  grants 
made  by  the  British  Government  was  not,  however,  merely  to 
assist  in  the  establishment  of  a  steamship  line  for  the  line's  sake, 
but  more  particularly  to  promote  rapid  communications  between 
England  and  her  American  and  Australian  possessions.  This 
motive  is  clearly  seen  in  the  fact  that  the  original  Cunard  con- 
tract stipulated  that  a  call  should  be  made  at  Halifax  on  both  the 
outbound  and  the  return  voyages  and  that  a  connecting  line 
should  be  operated  between  Halifax  and  Quebec. 

With  only  two  important  exceptions,  all  financial  aid  extended 
by  the  British  Government  has  been  in  the  form  of  postal  and 
Admiralty  subventions.  The  first  important  exception  was  in 
the  case  of  the  contract  made  with  the  Pacific  Steam  Navigation 
Co.,  in  1840.  granting  a  subsidy  for  the  operation  of  steamships 
along  the  west  coast  of  South  America.  A  more  recent  excep- 
tion is  to  be  found  in  the  subsidy  granted  the  Elder-Dempster 
Line  operating  between  Jamaica  and  England,  the  purpose  of 
this  subsidy  being  to  encourage  trade  in  the  agricultural  products 
of  Jamaica  which  was  then  in  a  condition  of  industrial  depres- 
sion. 

The  United  States  and  Germany,  whose  merchant  navies  rank 
next  in  importance  to  that  of  Great  Britain,  have  likewise  ex- 
tended financial  aid  to  shipping  only  in  the  form  of  mail  sub- 
ventions. The  United  States  instituted  this  policy  in  1847.  as 
stated  above,  and  for  a  time  made  much  more  liberal  payments 
than  the  British  Government,  but  in  spite  of  the  greater  aid  the 


GOVERNMENT    AID    TO    SHIPPING  135 

American  lines  did  not  prosper.  In  the  case  of  the  Collins  Line, 
which  received  most  generous  aid  for  about  10  years,  the  terms 
of  the  contract  were  probably  too  exacting  to  permit  of  the  suc- 
cessful operation  of  its  vessels  from  a  purely  commercial  stand- 
point, the  requirements  as  to  speed  and  frequency  of  sailings 
being  such  as  to  prevent  these  ships  from  securing  a  satisfactory 
amount  of  cargo.  In  the  opinion  of  many,  some  of  these  lines 
might  have  been  successful  if  the  subventions  had  not  been  with- 
drawn in  toto.  The  United  States  did  not,  however,  pursue 
the  policy  of  mail  subventions  continuously  until  the  passage  of 
the  mail  subsidy  act  of  March  3,  1891,  which  is  still  in  force. 

Germany  instituted  the  policy  of  mail  subventions  in  1886, 
when  a  contract  was  concluded  with  the  North  German  Lloyd 
for  service  to  the  Levant  and  the  Far  East.  These  grants  are 
considered  by  many  as  having  been  made  as  much  for  the  ex- 
tension of  German  trade  and  influence  as  for  the  development 
of  German  shipping.  One  of  the  most  striking  features  about 
the  whole  commercial  policy  of  Germany  is  the  fact  that  its 
commerce  and  shipping  have  been  so  effectively  coordinated 
that  each  contributes  directly  to  the  development  of  the  other. 
The  only  other  mail  subvention  paid  by  the  German  Govern- 
ment has  been  to  the  German  East  Africa  Line,  although  aid  of 
an  indirect  character,  namely,  preferential  railway  rates,  has 
been  jrranted  to  both  this  line  and  the  German  Levant  Line. 

The  largest  of  the  German  steamship  companies,  in  fact,  one 
of  the  largest  in  the  world — the  Hamburg-American  Line — has 
received  comparatively  little  financial  assistance  from  the  Ger- 
man Government.  For  a  time  it  shared  with  the  North  Ger- 
man Lloyd  a  subvention  paid  for  the  carriage  of  mails  to  China 
and  Japan,  but  the  amounts  received  in  this  manner  were  small. 

It  is  interesting  to  observe  also  that  probably  the  most  re- 
munerative service  of  the  North  German  Lloyd  has  been  the 
service  to  New  York,  and  that  the  amounts  received  by  this  com- 
pany from  the  United  States  Government  for  the  transporta- 
tion of  United  States  mails  to  Europe  have  been  on  the  average 
about  one-fourth  as  large  as  the  subventions  which  this  com- 


13G  IN'FLUENCE    OF    THE    GREAT    WAR    UPON'    SHIPPING 

pany  has  received  from  the  German  Government  for  services  to 
Australia  and  the  Far  East. 

The  subventions  paid  l)y  the  Norwegian  Government,  whose 
merchant  marine  ranks  tOurth  amonj^  the  merchant  navies  of  the 
world,  have  been  almost  exclusively  for  the  maintenance  of  mail 
lines  along  the  coast  of  Norway  on  routes  that  would  be  un- 
profitable without  financial  assistance  of  this  character. 

The  small  amounts  paid  in  mail  subventions  by  Sweden  and 
Denmark  are  also  largely  of  this  character. 

The  French  Government  has  for  years  paid  liberal  mail  sub- 
ventions for  routes  to  the  United  States,  the  West  Indies,  South 
America,  the  west  coast  of  Africa,  Corsica,  Australia,  China, 
and  Japan.  The  subventions  paid  to  these  lines  are  regarded  as 
having  contributed  more  to  the  maintenance  of  the  French  mer- 
chant marine  than  the  large  sums  expended  in  bounties  and  sub- 
sidies since  ISSl. 

Japan  has  paid  subventions  for  the  transportation  of  mails 
l)ractically  ever  since  that  country  a(loj)ted  the  European  type 
of  steamship.  The  original  grants  were  mainly  for  service  in 
the  Far  East,  but  in  recent  years  grants  have  been  made  for  serv- 
ices to  Europe  and  to  North  and  South  America. 

The  mail  subventions  paid  by  Italy,  the  Netherlands,  Spain 
and  Portugal  have  had  for  their  ol)ject  in  most  cases  the  improve- 
ment of  communication  between  the  mother  country  and  the 
colonies.  This  is  true  also  of  a  number  of  the  contracts  made 
by  the  French  Government  with  several  French  steamship  lines. 

Payments  made  under  the  mail  subvention  contracts  between 
the  Austrian  Government  and  the  Austrian  Lloyd  Steamship 
Co.  may  be  regarded  more  in  the  nature  of  subsidies  than  of 
subventions  since  the  grants  have  been  out  of  all  proportion  to 
the  amount  of  postal  service  rendered.  In  other  words,  under 
the  guise  of  mail  subventions  the  Austrian  Government  has  really 
paid  subsidies  whose  prime  purpose  has  been  to  promote  Austrian 
trade  and  shipping. 

The  Dominions  of  Canada  and  New  Zealand,  the  Common- 
wealth of  Australia,  and  the  Union  of  South  Africa  pay  large 


GOVERXMEXT    AID    TO    SHIPPIXG  137 

amounts  annually  in  the  form  of  mail  subventions.  When  these 
subventions  were  established,  the  primary  object  was  to  promote 
faster  and  more  regular  communication  with  the  mother  country. 
In  more  recent  years,  however,  the  commercial  motive  has  en- 
tered into  the  payment  of  these  grants.  This  motive  is  clearly 
shuwn,  for  example,  in  the  recent  contracts  of  the  Canadian 
Government,  which  require  that  in  the  assignment  of  cargo 
space  preference  shall  be  given  to  Canadian  goods  and  Cana- 
dian shippers. 

From  the  outset  the  mail  subvention  contracts  have  been  ex- 
acting in  their  requirements  as  to  speed,  sailing  time,  schedules, 
and  ports  of  call  and  in  the  matter  of  deductions  for  noncompli- 
ance with  contract  stipulations.  The  tendency  has  been  to  ex- 
tend the  re(|uirements  until  today  the  ordinary  mail  subvention 
contract  gives  the  government  not  only  a  very  large  control  over 
the  company's  affairs,  but  also  an  active  participation  in  its  de- 
liberations and  a  share  in  its  profits. 

(  b  )     Bounties  or  Subsidies. 

General  bounties  or  subsidies  to  merchant  shipping  are  of  com- 
[)aratively  recent  origin  if  an  exception  is  made  of  the  original 
grants  made  by  the  British  and  American  Governments  to  the 
lines  established  about  the  middle  of  the  last  century,  which 
were  at  the  outset  so  liberal  as  to  contain  a  large  element  of 
bounty  or  subsidy. 

The  system  of  paying  general  bounties  to  shipping  may  be 
said  to  have  been  instituted  by  France,  which  entered  upon  this 
policy  in  1881,  and  has  made  a  more  extensive  use  of  bounties 
than  has  any  other  country. 

The  first  subsidy  law  in  France,  that  of  January  29,  1881, 
was  adopted  after  careful  investigation  by  a  special  commission 
and  was  intended  to  assist  the  domestic  shipbuilding  industry  as 
well  as  the  shipping  under  the  French  flag. 

Much  of  the  benefit  that  might  otherwise  have  accrued  from 
tlie  liberal  bountv  expenditures  of  France  has  been  negatived 
by   the  almost  irreconcilable  conflict  between   shipbuilders   and 


138  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPriNG 

shipowners.  As  stated  alx)ve,  French  subsidy  legislation  has 
attempted  to  distribute  bounties  between  cunstructiun  and  navi- 
gation in  such  a  way  as  to  promote  the  interest  of  both  the  ship- 
builder and  the  shipowner.  Apparently  this  result  has  not  been 
attained,  since  the  shipowners  accuse  the  shipbuilders  of  absorb- 
ing not  only  the  construction  bounty  but  much  uf  the  navigatii)n 
bounty  by  raising  unnecessarily  the  prices  on  domestic  built  ships. 
Cash  payments  are  made  to  the  builders  on  the  basis  of  tonnage 
of  shipi)ing  built,  and  to  the  shipowners  on  the  basis  of  ijiiles 
sailed  in  foreign  trade.  Rnglish  owners  have  charged  that  the 
French  owners  have  at  times  made  voyages  merely  to  get  the 
bounty. 

It  is  extremely  doubtful  whether  any  system  of  Ijounties  can 
under  present  conditions  sufficiently  overcome  the  handicaps  of 
natural  conditions  so  as  to  enable  France  to  take  higher  rank 
among  the  merchant  navies  of  the  world. 

Italy  adopted  a  system  similar  to  that  of  France  about  i^>u^ 
vears  after  the  passage  of  the  first  French  subsidy  law,  that  is, 
in  1885.  Moreover,  Italy  has  made  changes  in  her  subsidy 
system  about  as  frequently  as  France,  and  on  the  whole  has  been 
little,  if  any.  more  successful.  Both  countries  have  been  handi- 
capped by  the  lack  of  a  highly  developed  iron  and  steel  industry 
such  as  would  enable  them  to  manufacture  iron  and  steel  vessels 
cheaply.  Italy  has  been  further  handicapped  by  the  heavy  bur- 
den of  taxation  and  lack  of  coal. 

Japan  rivals  France  in  the  extent  to  which  government  aid  has 
been  extended  to  merchant  shipping,  but  has  been  much  more 
successful.  The  method  followed  has  been  closely  modeled  on 
that  of  France.  The  Japanese  merchant  marine  has  developed 
more  rapidly  than  that  of  any  other  country  during  the  past  35 
years.  In  1880  the  economic  condition  of  Japan,  measured  by 
European  standards,  was  poor.  Likewise  the  shipping  industry 
of  the  country  was  comparatively  insignificant,  and  consisted 
largely  of  junks  suitable  only  for  navigation  in  coastal  waters  or 
trade  with  China  and  the  neighboring  islands. 

The  Japanese  merchant  marine  has  developed   from   almost 


GOVERNMENT    AID    TO    SHIPPING  139 

nothing,  and  shows  a  remarkable  rate  of  increase  largely  for 
that  reason.  Nevertheless,  the  increase  in  Japanese  shipping  has 
been  substantial,  and  it  is  due  in  part  to  the  payment  of  liberal 
subsidies.  The  Japanese  Government  realized  that  if  she  in- 
tended to  build  her  own  vessels  she  must  foster  the  shipbuilding 
indu.stry  until  her  people  had  learned  the  European  methods  of 
manufacture,  and  if  she  intended  to  operate  merchant  vessels  in 
competition  with  those  of  European  countries  she  must  assist 
Japanese  shipowners.  The  industry  could  not  exist  without  this 
aid. 

The  bounty  systems  of  the  Kingdoms  of  Austria  and  Hungary 
are  quite  similar  to  that  of  France. 

Spain  now  rivals  France,  Italy  and  Japan  in  the  extent  of 
government  aid  to  shipping.  For  many  years  the  only  direct 
aid  was  in  the  form  of  mail  subventions  for  rapid  communica- 
tion with  the  Spanish  colonies.  A  subsidy  system  was  not  intro- 
duced until  the  enactment  of  the  law  of  June  14,  1909.  This 
system  closely  follows  that  of  France.  It  is  difficult  as  yet  to 
say  what  the  net  result  of  the  law  has  been.  It  is  interesting  to 
note  that  the  law  has  been  suspended  since  the  outbreak  of  the 
present  war  in  Europe  largely  at  the  request  of  a  majority  of 
the  subsidized  lines,  which  were  making  such  large,  profits  as  to 
be  quite  independent  of  the  subsidies  and  desired  to  avoid  the 
restrictions  imposed  by  the  subsidy  laws. 

{c)    SiibfCHtioris  to  Foreign  Steamship  Lines. 

A  number  of  countries  pay  subventions  to  foreign  steamship 
lines.  The  principal  purpose  of  such  grants  has  been  to  utilize 
foreign  steamship  services  operating  to  remote  points. 

Italy  has  for  many  years  paid  a  subvention  of  70,000  lire 
($13,0 10)  to  the  Netherlands  Steam  Packet  Co.  for  the  trans- 
portation of  Italian  mails  between  Genoa  and  the  Dutch  East 
Indies. 

Belgium  has  paid  subventions,  either  in  direct  grants  or  in  re- 
imbursement of  pilotage  dues,  port  charges,  etc.,  to  three  Ger- 
man lines,  namely,  the  North  German  Lloyd,  the  German-Aus- 


140  INFLUENCE    OF    THE    GREAT    WAR    ITON    SHIPPING 

tralian  and  tlic  Kosmos,  and  io  a  Danish  line,  tlic  United 
Steamship  Co.  of  Copenhagen,  for  the  purpose  of  having  the 
steamers  of  these  lines  call  regularly  at  Antwerp.  Bulgaria  had 
the  same  object  in  view  in  making  annual  grants  tu  the  (iernian 
Levant  Line  and  to  Fraissinet  et  Cie..  a  I-'rench  steamship  line, 
for  making  regular  calls  at  Burgas  and  X'arna. 

Other  countries  that  have  paid  or  are  leaving  subventions  to 
foreign  steamship  lines  are:  Brazil,  which  contracted  in  r.Hli 
with  four  Italian  lines  for  a  service  between  I3razil  and  Italy; 
Chile,  which  formerly  granted  a  subvention  and  now  grants 
valuable  wharrtng  privileges  at  X'alparaiso  to  the  Pacific  Steam 
Navigation  Co..  a  British  line,  for  carrying  mails  between  Chile. 
Peru  and  England;  Mexico,  which  has  granted  subventions  to 
American,  Canadian,  British  and  Japanese  lines;  and  Xew  Zea- 
land, which  paid  a  subvention  to  the  Oceanic  Steamship  Co..  an 
American  line,  for  the  transportation  of  mail  between  Auckland 
and  San  Francisco. 


Sununary  of  the  Policies  of  Goicniincnt  Aid  by  Nations 

Great  Britain. 

England  was  the  first  country  after  the  advent  of  the  steam- 
ship to  pay  subsidies  or  subventions.  It  is  probably  accurate  to 
refer  to  the  original  grants  to  the  Peninsular  &  Oriental  Steam 
Navigation  Co.  and  the  Cunard  Line  as  combinations  of  subsidy 
and  subvention,  since  the  element  of  bounty  predominated  in 
those  years,  although  the  endeavor  to  promote  faster  comnumi- 
cations  to  India  and  Australia  and  to  Canada  was  also  stronglv 
emphasized.  In  its  early  stages  rapid  steam  navigation  was  a 
good  deal  of  an  experiment  and  expensive,  as  the  experience  of 
the  several  subsidized  American  lines  of  that  period  abundantly 
proved,  and  the  British  Government  deemed  it  expedient  to 
contribute  toward  the  expense  of  maintaining  the  new  lines. 

An  infant  industry  was  granted  protection,  however,  not 
merely  for  the  sake  of  the  industries  and  trade  of  Great  Britain, 
but  also  for  imperial  purposes  or.  in  other  words,  to  bring  the 


GOVERNMENT    AID    TO    SHIPPING 


141 


colonies  into  closer  communication  with  the  mother  country. 
The  colonial  subvention  element  in  the  early  grants  to  the  British 
steamship  lines  is  to  be  seen  in  the  fact  that  the  first  contract 
with  Samuel  Cunard  called  for  a  service  not  merely  between 
Liverpool  and  Boston  but  also  for  a  call  at  Halifax  on  both  the 
outbound  and  the  homeward  voyages,  and  for  a  connectmg 
line,  with  two  river  steamers,  between  Halifax  and  Quebec. 

One  of  the  striking  features  of  the  subvention  policy  of  Great 
Britain  is  that,  with  few  exceptions,  it  has  consisted  exclusively 
of  grants  for  the  operation  of  fast  mail  steamships  between  the 
mother  country  and  its  colonies.  An  important  exception  at  the 
outset  was  the  grant  to  the  Pacific  Steam  Navigation  Co.,  which 
then  operated  exclusively  on  the  west  coast  of  South  America. 
Another  exception — and  a  more  recent  one — was  the  subsidy 
paid  to  the  Klder-Dempster  Line  for  a  service  between  Jamaica 
and  luigland.  the  primary  purpose  of  this  grant  being  the  pro- 
motion of  the  banana  trade  of  Jamaica. 

Cargo  ships  have  received  no  aid  from  the  British  Government. 
No  bounties  have  been  paid  on  the  construction  of  any  ship  nor 
have  general  navigation  bounties  been  given.  It  might  be  sug- 
gested that  the  loan  at  low  rates  of  interest  to  the  Cunard  Co. 
for  tlic  building  of  the  Liisitania  and  the  Maurctania  is  a  con- 
struction bountv  to  the  extent  of  the  saving  in  interest,  but  since 
these  vessels  were  constructed  to  meet  admiralty  requirements 
and  were  to  have  unusual  speed,  the  saving  in  interest 
really    amounts    to    an    admiralty    subvention    for    admiralty 

purposes.  . 

The  financial  aid  extended  to  the  merchant  shipping  of  Great 
Britain  has  been  limited  to  a  small  proportion  of  the  total  ton- 
nage under  the  British  flag.  The  United  States  Commissioner  of 
Navigation,  in  his  annual  report  for  1S94  (page  91),  estimated 
that  Uie  tonnage  then  in  receipt  of  financial  aid  constituted  not 
more  than  ?>  per  cent  of  the  total.  It  is  probable  that  the  propor- 
tion is  no  higher  now.  . 

Attention  has  been  called  to  the  fact  that  cargo  or  freight 
steamers  have  never  received  aid  of  any  kind  from  the  British 


142  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Government,  and  this  is  true  also  of  a  number  of  lines  of  pas- 
senger steamers,  for  example,  the  White  Star  Line,  which  has 
been  a  competitor  of  the  Cunard  Line  in  the  transatlantic  trade 
and  has  been  far  more  successful  as  an  earner  of  dividends 
than  has  its  subsidized  rival.  This  is  true  also  of  the  Anchor 
Line,  the  Leyland  Line,  and  the  Red  Star  Line,  in  the  same 
trade. 

A  striking-  feature  of  the  policy  of  England  is  the  fact  that 
at  the  time  when  the  first  contracts  were  made  with  the  Cunard 
Line  and  the  Peninsular  Line  the  policy  of  free  trade  had  only 
recently  been  introduced,  and  that  not  long  after  (from  1S41)  to 
1854)  England  discarded  all  of  the  protectionist  features  of 
her  navigation  laws  which  had  been  in  force  for  about  two 
centuries. 

Among  the  laws  that  were  repealed  at  that  time  were  those 
which  restricted  to  British  ships  the  coasting  trade  of  the  United 
Kingdom,  the  trade  between  the  United  Kingdom  and  the  col- 
onies, and  the  trade  among  the  several  colonies ;  those  which  pro- 
vided that  no  produce  of  Asia,  Africa,  or  America  could  be  im- 
ported for  consumption  into  the  United  Kingdom  from  Europe 
and  that  none  could  be  imported  from  any  other  place  except 
in  British  ships  or  in  the  ships  of  the  country  of  production;  and 
those  providing  that  certain  specific  articles  of  European  pro- 
duction could  only  be  imported  for  consumption  when  trans- 
ported in  British  bottoms.  At  the  same  time  Parliament  re- 
pealed the  law  giving  the  government  power  to  impose  differ- 
ential duties  on  the  ships  of  foreign  nations  that  levied  similar 
duties  on  British  ships  and  the  law  restricting  British  registry 
to  British  built  ships. 

The  continuity  of  subvention  payments  to  the  lines  originally 
receiving  such  payments  is  another  feature  of  the  system  of  gov- 
ernment aid  as  followed  by  Great  Britain.  All  of  the  original 
subventioned  lines — the  Peninsular  &  Oriental,  the  Cunard,  the 
Royal  Mail  Steam  Packet  Co.,  and  the  Pacific  Steam  Naviga- 
tion Co. — are  still  in  existence  and  are  still  receiving  mail  sub- 
ventions.   The  support  of  the  British  Government  has  been  con- 


GOVERNMENT    AID    TO    SHIPPING  143 

stant.  In  this  respect  its  policy  is  in  marked  contrast  to  that  of 
the  United  States,  which  countr)-  has  been  spasmodic  in  its  sup- 
port of  lines  established  under  subventions. 

Canada. 

The  Canadian  Government  proposes  to  grant  tonnage  bounties 
to  equalize  the  difference  in  cost  of  construction,  as  compared 
with  the  price  charged  by  British  firms.  The  construction  of 
steel  vessels  under  this  scheme  had  been  begun  as  early  as  June, 
191G,  at  Halifax,  Nova  Scotia.^ 

Subsidies  have  also  been  propo-'ed  by  the  British  Columbian 
Government,  by  the  Nova  Scotian  Government  and  by  several 
municipalities.  In  some  cases  free  sites  are  to  be  granted  to 
shipbuilders  and  the  land  is  to  be  free  from  taxation. 

The  Government  of  British  Columbia  has  passed  an  act  pro- 
viding for  a  shipping  commission  with  powers  to  own,  buy, 
lease,  manage,  charter,  build,  rebuild  and  repair  ships  and  all 
kinds  and  descriptions  of  property.  The  commission  also  has  the 
administration  of  the  subsidy  policy.  The  act  provides  for  loans 
amuunting  to  .5")  per  cent  of  the  value  of  the  ships  built,  con- 
struction to  be  under  the  supervision  of  the  board  and  upon  plans 
and  specifications  approved  by  the  board.  The  loans  in  direct 
aid  will  be  paid  to  the  owner  of  each  ship  up  to  the  number  of 
not  more  than  20  ships  constructed  and  launched  in  the  province 
after  the  coming  into  effect  of  the  act,  in  ten  annual  instalments, 
each  instalment  being  computed  so  as  to  bring  the  net  earnings 
of  the  ship,  in  respect  of  which  aid  is  granted,  up  to  15  per  cent 
of  the  actual  cost.  The  subsidy  paid  on  any  one  year,  however, 
shall  not  amount  to  more  than  $5  per  ton  dead-weight  capacity. 
The  first  annual  payment  will  be  made  the  first  year  after  peace 
is  declared.  It  is  stipulated  that  the  bounty  will  be  paid  only  so 
long  as  the  ship  remains  in  continuous  British  Columbia  servico, 
that  is,  carries  cargo  from  British  Columbia  and  brings  return 
cargo  to  the  province.  Provision  is  also  made  for  aid  to  ship- 
building plants  to  the  extent  that  the  commission  may  advance  in 

•  }farmc  Review,  November,  1916,  p.  373,  and  Fairplay,  June  8,  1916,  p.  888. 


144  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

securities  to  the  amount  of  55  per  cent  of  the  actual  cost  of  each 
plant  as  certified  by  the  commission.^ 

The  mail  subsidy  to  the  Auckland-X'ancouver  Line  has  been 
renewed  for  another  year  at  the  rate  of  $!)7..'J30  for  1.'3  sailings, 
or  at  $7,487  per  voyage,  and  it  is  understood  that  the  Canadian 
Government  contributes  a  like  sum.  The  conditions  of  the  sub- 
sidy provide  that  the  steamers  of  this  line  give  New  Zealand 
and  Canadian  shipments  preference.  The  last  two  steamers 
from  Auckland  to  Vancouver  took  very  little  freight  for  points 
in  the  United  States,  since  most  of  the  space  was  taken  by  Cana- 
dian buyers;  and  it  is  understood  that  practically  the  same 
conditions  prevail  at  Vancouver. - 

The  United  States. 

The  only  direct  financial  aid  extended  by  the  United  States 
has  been  the  payment  of  mail  subventions.  Such  payments  may  be 
divided  into  three  periods,  namely,  1847  to  1857,  18G4  to  1877. 
and  1801  to  date.  Prior  to  the  enactment  of  the  postal  subsidy  law 
of  March  3,  1891,  the  efforts  of  the  United  States  along  this 
line  were  somewhat  spasmodic  and  lacked  definite  purpose.  Ap- 
parently too  much  was  expected  within  a  short  time  and  serious 
mistakes  were  made,  the  two  most  prominent  being  the  exces- 
sive speed  required  of  the  Collins  Line  and  the  use  of  a  corrupt 
lobby  in  1872  to  obtain  an  additional  subvention  for  the  Pacific 
Mail  Steamship  Line.  The  experience  of  the  United  States  with 
mail  subventions  has  not,  therefore,  been  overly  encouraging. 

The  merchant  shipping  of  the  United  States  has  entered  upon 
a  new  era  since  the  outbreak  of  the  war  in  Europe.  The  privi- 
lege granted  under  the  ship  registry  act  of  August  18,  1014,  of 
registering  foreign  built  ships  in  the  United  States  has  been  of 
great  assistance  in  the  development  of  the  American  merchant 
marine  and  may  continue  to  be  so.  Moreover,  as  a  result  of  the 
extensive  development  of  the  shipbuilding  industry  during  the 

'  Report  of  Vice  Consul  R.  ]\I.  Newcomb,  Victoria.  Marine  Review, 
September,  1916,  p.  312. 

■  U.  S.  Commerce  Reports,  December  8,  1917,  p.  943. 


GOVERNMENT    AID    TO    SHIPPING  145 

past  18  months  domestic  yards  may  possibly  be  able  in  the  future 
to  compete  on  more  nearly  even  terms  with  the  shipyards  of 
Great  Britain. 

We  have  the  interesting  example  of  a  single  American  city, 
Portland,  Oregon,  seriously  considering  the  advisability  of  sub- 
sidizing a  steamship  line  to  serve  its  trade. 

Recognizing  the  need  of  better  shipping  facilities,  particu- 
larly for  Columbia  River  traffic,  and  determined  to  take 
some  action  looking  to  improvement,  about  40  of  the  rep- 
resentative business  men  of  Portland,  Ore.,  recently  met 
with  the  directorate  of  the  chamber  of  commerce  and 
adopted  plans  which,  it  is  believed,  will  solve  the  question. 
The  Marine  Review  for  October,  191 G,  briefly  outlined  the 
project  inaugurated  for  financing  a  company  for  the  con- 
struction of  ships  to  operate  between  Portland  and  Alaska, 
Puget  Sound.  San  Francisco,  and  other  points  on  the  Pa- 
cific Coast.  The  plan  is  to  raise  a  tax  of  one  mill  a  year 
for  five  years,  the  fund  to  be  disposed  of  by  a  commissioner 
of  docks,  port  of  Portland,  or  a  special  shipping  commis- 
sion authorized  by  legislative  act,  in  the  form  of  a  subsidy 
or  bonus  for  steamship  lines  that  will  give  the  service 
needed.^ 

Indirect  Aid.  The  monopoly  of  the  coasting  trade  to  Ameri- 
can built  vessels  has  been  an  advantage  that  built  up  our  marine 
to  a  certain  point,  but  it  could  not  help  us  to  enter  the  overseas 
trade  despite  our  policy  of  free  import  of  shipbuilding  ma^ 
terials. 

Gernianx.  , 

The  financial  aid  extended  to  the  merchant  shipping  of  Ger- 
many has  been  comparatively  small,  and  may  be  said  to  have  been 
given  as  much  for  the  extension  of  German  trade  and  influence 
as  for  the  development  of  German  shipping.  The  largest  of  the 
German  lines,  the  Hamburg-American  Line,  which  is  one  of 
the  largest  in  the  world,  has  developed  rapidly  without  direct 
government  aid.     Much  of  the  development  of  the  next  largest 

'  Marine  Revieu:  October,  1916,  p.  352. 


14(3  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

German  line,  the  Xorth  German  Lloyd,  has  been  accomplished 
on  the  unsubsidized  services.  The  only  important  mail  subven- 
tion contracts  have  been  with  the  North  German  Lloyd  fur  serv- 
ices to  the  Far  East  and  Australia  and  with  the  German  East 
Africa  Line  for  services  to  the  German  East  African  colonies. 

The  rapid  development  of  the  German  merchant  marine  is 
due  chierty  to  favorable  economic  conditions.  The  imports  and 
exports  of  Germany  are  not  only  large  but  also  well  balanced  in 
tonnage ;  moreover,  the  foreign  trade  is  concentrated  largely  at 
Hamburg  and  Bremen,  which  assures  a  maximum  of  cargo  for 
ships  calling  at  these  ports.  Much  of  the  success  of  German 
shipping  is  attributable  also  to  the  etTicient  coordination  of  the 
industrial  and  commercial  activities  of  the  country.  Mention 
should  also  be  made  of  their  success  in  forming  combinations 
and  in  driving  away  foreign  competition  as  explained  in  Chap- 
ter 1. 

Reservation  of  Coasting  Trade.  The  coasting  trade  of  Ger- 
many is  open  to  the  ships  of  all  nations  granting  reciprocal  priv- 
ileges. The  German  seacoast  is  of  comparatively  small  extent 
and  offers  little  support  for  the  development  of  a  merchant 
marine.  The  highly  developed  system  of  canals  and  railroads 
in  Germany  affords,  on  the  whole,  a  more  direct  and  efficient 
means  of  transportation  between  points  located  along  the  sea- 
board than  is  possible  on  the  North  and  Baltic  seas,  although  the 
Kaiser  W'ilhelm  (or  Kiel)  Canal  shortens  by  hundreds  of  miles 
the  journey  between  points  on  the  North  Sea  and  the  Baltic 
Sea,  and  has  done  much  to  improve  the  coasting  trade. 

Exemptions  from  Import  Duties.  Germany  has  long  pursued 
the  policy  of  granting  free  admission  to  foreign  built  seagoing 
vessels  and  to  foreign  built  vessels,  other  than  pleasure  craft, 
for  navigation  on  rivers  and  lakes,  and  this  policy  is  still  pur- 
sued, although  the  domestic  shipbuilding  industry  has  developed 
greatly  and  is  now  able  to  turn  out  the  tonnage  demanded  by 
German  shipping  interests. 

Although  there  is  no  general  requirement  that  ships  seeking 
registry  in  Germany  must  be  built  in  German  yards,  it  is,  nev- 


GOVERNMENT    AID    TO    SHIPPING  147 

ertheless,  required  that  the  vessels  of  subventioned  lines  must  be 
of  domestic  construction. 

Another  advantage  enjoyed  by  German  shipbuilders  is  the 
privilege  of  importing,  free  of  duty,  foreign  materials  required 
for  the  construction,  equipment,  or  repair  of  vessels,  other  than 
pleasure  craft,  for  use  on  the  high  seas,  rivers,  or  lakes. 

Preferential  Raikvay  Rates.  The  policy  of  granting  preferen- 
tial railway  rates  on  shipbuilding  materials  transported  from  the 
interior  section  of  Germany  has  also  been  of  marked  benefit  to  the 
German  shipvards.  This  poHcy  was  instituted  in  October,  1885 
and  provides  for  a  reduced  rate  for  the  transportation  by  rail  of 
raw  and  manufactured  materials  used  in  shipbuilding,  such  as 
steel  plates,  angle  bars,  rivets,  bolts,  chains,  anchors,  etc..  shipped 
from  the  great  centers  of  the  iron  and  steel  industry  on  the  Rhine 
to  the  shipvards  at  Hamburg.  Bremerhaven  and  other  ports. 

In  addition  to  the  reduced  rates  granted  by  the  state  railways 
for  the  transportation  of  shipbuilding  materials  from  the  Rhine 
and  other  districts  to  the  great  shipyards  at  Hamburg  and 
Bremerhaven.  the  state  railways  offer  special  reduced  rail  rates 
on  practically  all  export  commodities  shipped  on  through  bills  of 

^^"^r tecial  form  of  preferential  railway  rates  was  introduced 
on  Tune  15  1890,  when  the  German  Levant  Line  was  established 
and  was  used  again  on  April  1.  1915,  in  the  case  of  the  German 
Fast  Africa  Line.  Goods  exported  from  interior  points  in  Ger- 
manv  on  through  bills  of  lading  either  to  the  Levant  or  to  East 
Africa  via  these  lines  are  granted  largely  reduced  transporta- 
tion rates  on  the  German  state  railways.  The  railway  portions 
of  these  through  rates  are  said  to  be  much  lower  than  those  ap- 
plied to  goods'sent  to  German  ports  for  exportation  by  sea  to 

"1^r::^%^en  m  the  tari^  of  the  Levant  Line  are  based 
upon  he  arrangement  of  this  company  with  the  German  Govern- 
ment for  carr^'ng  exports  from  the  interior  of  Germany  to  the 
port  "tie  Le^^nt' excepting  Tunis  and  Tripoli),  including 
mI  ta    Alexandria,  Pir.us,  Smyrna,  all  the  important  ports  of 


148  IXFLUENCE    OF    THE    GREAT    WAR    UPON'    SHIPPING 

Turkey,  Bulgaria,  Roumania  (and  various  stations  of  the  Turk- 
ish and  Bulgarian  Railway),  and  all  ports  un  the  Black  Sea. 
Besides  being  favored  by  the  reduced  sea  freights  of  the  Levant 
Line  and  the  German  state  railways,  goods  sent  by  this  com- 
pany's steamers  on  through  bills  of  lading  are  allowed  also  re- 
duced rates  of  transportation  on  the  Turkish  and  Bulgarian  rail- 
way lines,  if  destined  for  stations  thereon. 

How  the  preferential  railroad  rates  of  Germany  work  out  in 
practice  was  recently  stated  by  Robert  P.  Skinner,  the  United 
States  consul  general  at  Hamburg.  In  a  report  to  the  United 
States  Government,  quoted  in  Fair  play,  March  30,  lOlC,  he  wrote 
that  in  November,  IIUI,  a  manufacturer  in  the  vicinity  of  Frank- 
fort shipj)ed  one  hundred  cases  of  zinc  dust  to  Lorenzo  Marques, 
upon  which  the  transit  tariff  from  Frankfort  to  destination  via 
Hamburg  was  $132. SC;  whereas  a  Hamburg  exporter,  under- 
taking to  forward  a  similar  consignment  out  of  his  local  stock, 
would  have  been  obliged  to  pay  in  the  first  place,  land  freight 
from  Frankfort  to  Hamburg  $52.41,  plus  sea  freight  amounting 
to  $152.77,  or  almost  50  per  cent  more  than  the  sliipper  irom 
the  interior.  The  Hamburg  exporter  got  over  the  difficulty  by 
sending  his  goods  to  a  nearby  town  in  the  interior  and  thence 
reshipping  them  under  a  through  bill  of  lading  to  the  foreign 
destination,  so  as  to  obtain  the  export  rate.  The  effect  of  this, 
of  course,  is  to  enable  the  shipper  to  deliver  his  goods  at  the 
destination  at  a  lower  freight  charge  than  the  British  competitor, 
as  well  as  to  prevent  the  British  shipowner  carrying  the  goods. ^ 

France. 

France  has  been  called  the  "  bounty  giving  nation  par  ex- 
cellence." The  policy  of  granting  aid  to  the  merchant  shipping 
of  France  has  been  so  long  in  operation  as  to  have  become  virtu- 
ally a  tradition. 

The  policy  of  granting  mail  subventions,  which  seems  to  have 
produced  better  results  than  the  bounty  system,  was  instituted 
on  a  formal  contract  basis  as  early  as  1S51  and  has  been  in  force 

•  Fairplay,  March  30,  1916,  p.  535. 


GOVERNMENT    AID    TO    SHIPPING  149 

since  that  time.  The  bounty  system  was  not  introduced  until 
1881  and  has  been  in  force  continuously  since  that  time,  although 
a  number  of  important  changes  have  been  made  in  the  original 
scheme.  Each  succeeding  subsidy  law  has  been  more  exacting 
in  its  requirements  and,  on  the  whole,  more  liberal  in  its  pay- 
ments than  the  preceding  one.  The  amendments,  however,  do 
not  appear  to  have  had  the  desired  effect,  for  no  substantial 
benefit  has  resulted  from  the  large  amounts  expended. 

As  has  been  stated  above,  France  has  attempted  by  the  pay- 
ment of  liberal  bounties  to  overcome  serious  handicaps  of  her 
present  economic  condition. 

Italy. 

Italy  has  followed  the  example  of  France  in  attempting  to 
overcome  natural  handicaps  by  the  payment  of  liberal  subventions 
and  subsidies.  An  elaborate  system  of  bounties,  which  was  in- 
troduced in  Italy  in  1885,  or  about  four  years  later  than  a  simi- 
lar system  was  adopted  in  France,  has  not  on  the  whole  been 
successful  although  large  amounts  have  been  expended. 

The  mail  subventions  have  probably  been  more  successful  than 
general  subsidies  and  the  large  expenditures  made  on  this  account 
have  been  warranted  to  a  great  extent  as  a  part  of  the  Italian 
program  of  greater  influence  in  the  world's  affairs  and  because 
of  the  use  of  these  ships  as  an  auxiliary  for  the  navy. 

Atisiria-Hungary. 

The  policy  of  Austria-Hungary  is  really  the  policy  of  the 
Kingdoms  of  Austria  and  Hungary  acting  in  their  separate 
capacities.  The  policy  of  granting  financial  aid  to  shipping  has 
been  in  operation  in  Austria  since  185G  when  the  state  assisted 
in  the  organization  of  the  Austrian  Lloyd  by  guaranteeing  the 
interest  of  the  capital  borrowed  by  the  promoters  of  the  com- 
pany. From  that  day  to  this  the  relations  of  the  Austrian 
Lloyd,  which  has  the  largest  amount  of  tonnage  under  the 
Austrian  flag,  and  the  Austrian  Government  have  been  inti- 
mate. 


150  INFLUEN'CE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Japan. 

The  policy  of  granting  direct  financial  aid  to  merchant  ship- 
ping was  adopted  by  Japan  not  long  after  that  country  adopted 
the  European  type  of  ship.  The  original  grants  were  mail  sub- 
ventions to  promote  steamship  services  in  the  adjacent  Far  East. 
A  liberal  subsidy  policy  was  instituted  in  ISDG  under  a  law  re- 
sembling in  many  respects  the  subsidy  laws  of  France.  The  ex- 
penditures of  Japan  for  mail  subventions  and  subsidies  have  been 
very  liberal.  The  fact  that  the  merchant  marine  of  Japan  has  de- 
veloped very  rapidly  since  the  institution  of  the  subsidy  policy 
has  Ijeen  attributed  by  many  to  the  lil)cral  state  aid  which  it  has 
received,  but  account  should  be  taken  of  the  fact  that  Japan  has 
had  a  remarkal)le  industrial  and  commercial  development  during 
this  period.  Although  the  j)rincipal  Japanese  steamship  companies 
have  been  in  receipt  of  government  aid  since  isSS  and  have  de- 
veloped rapidly,  their  financial  statements  for  recent  years  show 
that  they  have  not  got  beyond  the  need  for  financial  assistance 
from  the  state.  In  other  words,  the  "  infant  industry  "  has  never 
grown  up. 

Scandinaznan  Countries. 

Norway.  Sweden  and  Denmark  have  merchant  navies  that 
rank  among  the  largest  in  the  world.  These  countries  rank  very 
high  in  respect  to  per  capita  ownership  of  merchant  shipping.  The 
development  of  the  merchant  marine  of  Norway  has  far  out- 
stripped that  of  France,  and  has  been  due  in  a  very  small  de- 
gree, if  any,  to  financial  aid  granted  by  the  Norwegian  Govern- 
ment. The  grants  made  to  Norwegian  shipping  companies 
have  been  primarily  and  almost  exclusively  for  the  maintenance 
of  mail  services  along  the  coast  of  Norway.  The  high  rank  of 
Norway  as  a  shipping  nation  is  due  to  the  seafaring  qualities  of 
her  people,  to  her  geographic  location,  and  to  the  fact  that 
because  of  her  limited  industrial  development  merchant  shipping 
offers  greater  financial  rewards  and  better  opportunities  for  the 
employment  of  her  capital  and  her  people. 

The  policy  of  Sweden  and  Denmark  has  been  similar  to  that 


GOVERNMENT    AID    TO    SHIPPING  151 

of  Norway  in  that  the  financial  aid  by  the  government  has  been 
limited  chiefly  to  the  payment  of  small  amounts  for  mail  and 
trade  communications,  mainly  within  the  limits  of  the  Baltic 
Sea. 

The  Netherlands. 

The  policy  of  the  Netherlands  has  been  distinguished  by 
the  fact  that  no  bounties  or  subsidies  have  been  paid.  The  direct 
aid  extended  by  the  government  has  been  exclusively  for  mail 
subventions  to  improve  steamship  and  mail  communication  with 
the  far  distant  colonies. 

Belgium. 

The  most  striking  feature  about  the  policy  of  Belgium  has 
been  the  indifl'erence  to  a  Belgian  merchant  marine.  Belgium, 
which  has  a  very  large  overseas  trade,  has  been  content  to  have 
most  of  this  trade  carried  in  foreign  bottoms  and  has  gone  so 
far  as  to  subsidize  directly  and  indirectly  three  German  lines 
and  one  Danish  line. 

Spain  and  Portugal. 

Spain  has  pursued  the  policy  of  granting  mail  subventions 
since  18G1.  when  a  contract  was  made  with  the  Compahia 
Transatldntica  Espanola  for  the  regular  transportation  of  mails 
to  Santo  Domingo,  Cuba,  and  Porto  Rico,  and  it  was  not  until 
1909  that  a  general  bounty  or  subsidy  law  was  instituted.  The 
payments  of  financial  aid  to  the  merchant  shipping  of  Portugal 
have  been  on  account  of  mail  subvention  contracts  for  regular 
transportation  on  routes  between  Portugal  and  her  several 
colonies. 

Latin  American  Countries. 

Subventions  are  paid  by  five  Latin  American  countries,  namely. 
Brazil,  Chile,  Guatemala,  Mexico  and  Peru.  All  of  these  coun- 
tries pay  subventions  to  foreign  lines  for  the  purpose  of  having 
the  benefit  of  the  overseas  communications.     All  except  Guate- 


152  IXI-LUEXCE    OF    THE    GREAT    WAR    IPOX    SH  II'TING 

mala  pay  subventions  to  national   lines  also,   but   the  amounts 
thus  paid  by  Mexico  were  small  and  were  for  inland  river  lines. 

The  Influence  of  the  War 

The  basis  of  government  aid  to  shipping  has  been  modified 
and  largely  destroyed  for  a  time  by  the  war.  First,  it  has  put 
the  freight  rates  up  so  that  any  ship  could  make  profits  any- 
where. The  request  of  the  Spanish  lines,  mentioned  above,  to 
be  freed  from  their  subsidy  contracts  so  that  they  could  roam 
the  seas  and  make  money  is  interesting.  The  seizure  of  vessels, 
both  line  and  tramp,  by  governments  and  their  operation  on 
govenmient  order  far  transcends  anything  before  known. 

However,  the  war  will  end  presently  and  the  war  experience 
will  have  its  chief  result  in  making  men  feel  the  need  of  ships  and 
many  nations  will  examine  anew  the  j)rewar  experiences  to  see 
which  method  shall  be  used  to  guarantee  national  ships  upon 
the  sea. 


CHAPTER  VI 

Control  and  Operation  of  Shipping  by  the  British 
Government,  1914-1918 

The  Government's  Requisition  Policy 

The  war  with  its  sudden  demand  for  overseas  transport  found 
plenty  of  idle  ships  available  for  the  needs  of  the  government. 
The  Admiralty  and  the  War  Office,  following  accustomed  prac- 
tice, chartered  them  for  a  time  as  any  other  charterers.  They 
also  requisitioned  some  ships,  as  British  law  provides  that  the 
government  can  take  the  ship  first  and  pay  for  it  afterwards. 
In  fact,  many  steamers  taken  in  August  had  not  had  rate  of 
settlement  agreed  upon  the  following  January.^ 

October,  1914,  brought  the  realization  of  a  long  war.  The 
British  Government  settled  down  to  it  in  earnest.  Shipping  rates 
started  to  rise  and  the  government  instead  of  getting  ships  one  at 
a  time  on  individual  dicker  at  market  rate  through  brokers,  estab- 
lished the  now  famous  and  much  denounced  Blue  Book  rates, 
which  were  published 

in  Blue  Book  form  in  October,  1914,  based  upon  normal 
working  expenses  at  that  time,  by  the  Admiralty  Arbitra- 
tion Board.  The  government  rate  of  hire  (lis.  per  ton 
gross)  for  a  common  ocean  cargo  steamship  of  the  popular 
size  of  7,000  tons  dead-weight  carrying  capacity,  works  out 
about  Gs.  Gd.  per  dead-weight  ton  per  month,  out  of  which 
all  the  running  expenses  including  wages,  provisions,  stores, 
repairs,  renewals  and  maintenance,  marine  insurance,  pro- 
tection and  indemnity,  management  and  superintendence, 
etc.  have  to  be  paid  by  the  owners.  The  gross  monthly  hire 
of  such  a  British  tramp  is  about  £2,275  sterling,  paid  only 
so  long  as  she  is  in  an  efficient  working  condition. 

'  Fairplay,  January  14,  1915. 

153 


154  IXFLUENCE    OF    THE    GREAT    WAR    L'PON    SHIPPING 

The  neutral  steamer  of  the  same  class  has  been  paid  dur- 
ing the  past  year  (1!>10)  up  to  4r)s.  per  dead-weight  ton  per 
month,  employed  in  British  trades  for  continuous  periods  of 
time,  so  that  her  gross  monthly  hire  has  been  as  high  as 
£15,750  sterling,  or  close  upon  seven  times  the  monthly  gross 
earnings  of  a  similar  requisitioned  British  cargo  steamer. 
.  .  .  A  particular  case  of  three  steamers  under  requisition 
fur  long  periods  has  been  brought  under  my  notice,  where 
the  (actual  working  expenses)  tigures  show  that  the  govern- 
ment rate  of  hire  is  less  than  the  actual  expenses,  7vlic>i  the 
cost  of  marine  insurance  at  replacement  ivlue  payable  by  the 
oivner  is  taken  into  account,  because  of  the  heavy  increase 
in  working  costs,  and  particularly  the  great  rise  in  marine 
insurance  premiums  since  the  Blue  Book  rates  were  insti- 
tuted.' 

These  rates  represented  a  fair  competitive  rate  at  the  moineni, 
but  they  reflected  the  market  for  scarcely  a  week,  as  they  were 
made  at  the  very  beginning  of  the  swift  and  unprecedented  ascent 
of  rates  which  government  requisitioning  helped  to  produce.  A 
year  later  one  of  the  under-secretaries.  Dr.  McXamara,  speaking 
in  the  Mouse  of  Commons,  in  answer  to  the  question  as  to  how 
much  more  the  government  was  paying  for  chartered  vessels  at 
the  present  time  as  compared  with  the  prewar  period,  said,  that 

in  the  case  of  transports  the  percentage  of  increase  in  the 
price  per  ton  may  be  taken  as  alxDut  11  per  cent  above  the 
figures  generally  ruling  at  a  date  shortly  before  the  war. 
In  the  case  of  colliers  the  rates,  so  far  as  comparable,  are 
about  18  per  cent  higher  than  in  1013,  while  in  the  case  of 
oil  tankers  the  rates  now  paid  are  actually  20  per  cent  lower 
than  in  1913.  When  it  is  borne  in  mind  that  expenses  have 
materially  increased,  in  some  instances  by  over  100  per  cent, 
it  will  be  seen  that  shipowners  are  receiving  net  consider- 
ably less  when  chartering  their  vessels  to  the  government 
than  shortly  before  the  war." 

The  British  shipowner,  long  subject  to  the  fluctuations  of  the 
market,  taking  all  he  could  get,  standing  his  losses  when  they 

'  Fairplav,  February  15.  1917,  p.  308. 
'Ibid.,  November  4,  1915,  p.  715. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  155 

came,  has  been  in  a  peculiarly  exasperating  situation.  Here  was 
his  ship  taken  by  the  government  at  a  low,  not  to  say  unprofitable 
rate,  and  here  was  the  ship  market  where  the  law  of  supply  and 
demand  let  fortune  lie  in  every  charter.  Naturally  this  follower 
of  supply  and  demand  felt  aggrieved,  and  that  conservative  ship- 
ping journal,  Lloyd's  Weekly,  stated  his  feelings  thus: 

There,  is  no  reason  why,  following  the  universal  law  of 
supply  and  demand,  the  shipowner  should  not  be  entitled  in 
every  sense  to  the  profits  accruing  from  increased  freights.* 

Fortunately  for  Britain  this  appeal  for  an  old  right  which  had 
suddenly  become  almost  the  right  of  piracy  has  fallen  upon  deaf 
governmental  ears. 

The  British  Government  gave  the  shipowner  a  very  substantial 
sop,  however,  by  promising  that  the  vessels  were  to  be  taken  only 
for  war  work  -  and  that  a  part  of  every  man's  fleet  should  be 
left  free  to  work  the  competitive  market,  which  would  naturally 
rise  in  response  to  the  shortage  created  by  the  requisitions  of 
government.  Thus  he  could  recoup  himself.  Apparently  the 
administration  made  a  consistent  effort  to  leave  this  free  margin 
of  shipping  for  all  the  owners,^  but  Lloyd's  allege  that  it  was 
not  always  done,*  and  Fairplay,  the  champion  of  the  individual 
owner,  maintained  at  the  end  of  1916  (see  January  4,  1917,  page 
IG)  that  either  the  Blue  Book  rates  must  be  amended,  or 

owners  must  be  allowed  an  occasional  voyage  off  requisi- 
tion to  take  advantage  of  high  rates  of  freight  where  these 
do  not  affect  the  Allies;  for  instance,  a  freight  from  the 
United  States  to  Spain,  Brazil,  Argentina,  etc. 

'  December  17,  1915.  p.  804. 

'  Fairplay.  December  28.  1916. 

'  See  Marine  Review,  May,  1916.  for  an  account  of  the  elaborate  system  of 
ship  records. 

'  "  The  real  kernel  of  the  trouble  seems  to  be  that  certain  shipowners  have 
had  large  percentages  of  their  fleets  taken  over  for  Admiralty  work,  while 
others  have  had  but  a  few  ships  commandeered.  These  latter  fortunate  ones 
have  consequently  been  able  to  reap  the  full  advantage  of  their  full  tonnage 
in  the  highly  paid  trades  of  the  world."  Lloyd's  Weekly,  Review  of  Shipping 
in  1915.  ^ 


l^>0  INFLUENCE    OF    THE    GREAT    WAR    LPON    SHIPPING 

The  same  journal  charged  (August  -'*,  I'.'IT.  page  't'M)  that  the 
government  had  induced  shipowners  to  undergo  costs  amounting 
to  many  thousands  of  pounds  per  ship  on  the  promise  that  a  free 
voyage  at  current  rates  would  he  allowed  them  in  order  to  recover 
the  extra  amount  so  disbursed.  "  Things  seemed  shipshape,  but 
what  happened?  The  government  repudiates  the  promise  and 
re(|uisitions  boats  immediately  they  arc  linishcd." 

The  Blue  Book  rates  had  an  elaborate  scale  providing  for  tlif- 
ferent  rates  of  payment  for  vessels  of  difTerent  speed,  type  and 
condition,  but  much  complaint  arose  from  the  application  of  these 
rates  to  particular  ships: 

The  Director  of  Transports  has.  however,  now  l)een  guilty 
of  an  even  greater  act  of  injustice,  as,  after  using  high 
class  steamers  of  11  to  I'J  knots  for  the  carriage  of  troops 
and  horses  for  periods  up  to  twelve  months,  which  vessels 
were,  however,  not  previously  run  in  regular  lines,  he  has 
suddenly  decided  that  these  boats  must  l^e  classed  as  common 
tramp  steamers  and  be  paid  accordingly. 

lie  has  laid  it  down  that  a  very  ordinary  tramp  steamer 
'20  years  old  and  steaming,  say,  s  knots  with  difficulty,  is 
a  regular  liner  because  she  has  been  running  in  a  regular 
line,  and  must  therefore  be  paid  for  at  the  rate  of  12s.  ."Ul.  per 
ton  gross,  whereas  the  high  class  modern  steamer  with  a 
speed  of  say  i;>  knots,  which  has  rightly  been  receiving  15s. 
3d.  per  ton  gross  under  the  same  charter,  or  ISs.  3d.  if 
requisitioned  in  Australia  or  Xew  Zealand,  is  only  entitled 
to  lis.  per  ton  because  she  is  a  common  or  garden  tramp, 
and  that  the  owner  must  repay  to  the  Admiralty  all  amounts 
received  over  and  above  this  rate.^ 

The  High  Profits  of  the  Early  War  Period 

Of  the  22,000,000  tons  gross  of  British  shipping  (35,000,000 
tons  dead-weight)  Mr.  J.  H.  Welsford  -  says  that  approximately 

'  Fail-play,  September  20,  1915,  p.  501.  CThis  is  a  striking  illustration  of 
the  point  made  in  Chapter  I  that  it  is  hard  to  draw  the  line  between  tramp 
and  liner.) 

'Ibid..  March  8.  1917,  p.  421. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  157 

25  per  cent  was  immediately  requisitioned  at  the  Blue  Book  rates. 
Other  authority  states  that  the  government  was  operating  1,200 
steamers  by  the  end  of  October.     This  was  really  just  enough  to 
produce  the  desired  (by  shipowners)  condition  of  famine  so  far 
as  rates  were  concerned  and  leave  the  owners  enough  tonnage  to 
reap  a  rich  harvest.     The  ensuing  year  was  the  hey-dey  of  British 
shipping  frcjm  the  standpoint  of  profits — the  richest  harvest  in 
shipping  history.     For  example,  a  small  company  in  ten  and  a 
half    months    made    105    per   cent    profits   on    its    four    tramp 
steamers.'     While  this  was  perhaps  unusually  large,  it  was  a 
year  of  great  pr(jfits  all  around,  and  a  year  during  which  public 
animosity  toward  the  shipowners  rose  to  a  strong  point.     Being 
islanders  intimately  connected  with  the  shipping  business,  and 
knowing  their  vital  dependence  upon  it,  the  news  of  shipping 
profits  went  to  every  hamlet  in  the  kingdom.     It  was  easier  to 
hear  of  the  great  profits  of  shipping  than  it  was  to  hear  of  other 
war  profiteers.     The  rising  prices  could  very  easily  and  naturally 
l)e  blamed  ui)on  the  shipowner  whether  he  was  guilty  or  not,  so 
that  he  became  a  kind  of  national  scapegoat  for  the  whole  tribe 
of  profiteers.     Lloyd  George  said  that  whenever  he  went  after 
any  group  of  laborers,  as  he  often  did,  in  an  attempt  to  get  them 
to  work  better,  or  to  get  them  to  make  concessions  for  the  public 
welfare,  he  always  had  hurled  in  his  teeth  some  bitter  remarks 
about  the  undue  and  extravagant  profits  of  shipowners— why 
didn't  he  stop  their  profits  too." 

The  Asquith  administration  refused  to  take  formal  control  of 
the  shipping  of  the  country,  despite  many  requests  that  it  should 
do  so.  Thev  did.  however,  make  many  indirect  efforts  that 
resulted  in  substantial  rate  reduction.  Shipowners  were  in- 
formally notified  that  if  they  didn't  take  moderate  rates  their 
boats  would  be  requisitioned.  In  other  cases,^  shipowners  were 
flatlv  told  to  take  oats  at  5s.  a  quarter,  or  the  boat  would  be 
requisitioned,  thev  took  5s.  a  quarter,  which  was  much  less 
than  the  open  rate,  but  better  than  the  Blue  Book  rates.     Later 

^  Fair  play,  December  23.  1915. 
'  Ibid.    December  21,  1916,  p.  958. 
'  Ibid.,  November  11,  1915. 


158  I.NTLL'LNCIi    <'l-     1111.    GREAT    WAR    I'l'n.s     Miirii.Ni. 

came  the  licensing  of  imports,  and  ihrougli  the  refusal  of  licenses 
grain  rates  were  kcj)t  clown  sometimes  as  much  as  l<>s.  per  (|uar- 
ter.'  In  Xovc'inl)cr,  r.>l').  an  Order  in  Council  gave  the  Boanl 
of  Trade  power  U)  recjuisilion  merchant  ships  in  case  of  emer- 
gency for  the  carrying  of  foodstutTs  ami  other  necessary  supplies. 
The  power  was  to  he  exercised  hy  a  recpiisitioning  committee 
which  had  two  aims:  to  have  tonnage  available  in  case  of  need, 
and  "  to  prevent  freights  im  such  commodities  (foods)  rising  to 
prohibitive  levels."  ■ 

By  January,  l*M'>,  tin.-  \(hniralty  \\.i>  i.iiKti  the  largest  ship- 
owner in  the  world,  merchant  ships  oidy  being  counted,*  but 
during  the  year  1'.>1'>  there  was  a  steady  increase  in  the  requisi- 
tioning of  ships.  In  November  the  net  numl)er  added  was  111, 
in  December  rj!».  while  lO'.J  were  added  in  the  first  half  of 
January.  lltH!.*  They  were  usually  taken  in  the  British  ports. 
This  made  the  British  ship  undesirable  because  no  charterer  knew 
when  a  prize  worth  a  fortune  would  be  taken  away  from  him.  so 
that  in  some  cases  the  neutral  got  a  2'>  per  cent  or  Inrtter  rate 
than  British  vessels,  and  I>ritish  vessels  shunned  the  United  King- 
dom whenever  they  could. ^  Their  opportunities  for  avoiding  the 
United  Kingdom  were  ended,  however,  by  the  regulation  late  in 
1!)15.  that  there  should  l)e  no  more  triangular  voyages  whereby 
the  British  vessel  carried  a  cargo  from  one  neutral  to  an- 
other." 

By  the  end  of  1015  the  pressure  of  the  national  need  was  be- 
ginning to  make  itself  felt  on  British  shipping.  The  increase  of 
requisitioning  at  Blue  Book  rates,  estimated  at  50  per  cent  of 
total  by  January  1,  lOlCt."  and  the  increase  of  taxation  began  to 
show  themselves  in  the  value  of  British  shipping.  For  example. 
sister  ships,  the  one.  British,  sold  in  October  of  that  year  for 

'  Fairplav,  April  6.  1916. 

=  Ibid.,  November  18.  1915,  p.  803. 

*  Ibid..  January  14,  1915. 

*  Statement  by  Under-Secretary  >[cXamara.  Fatrtlax,  January  27,  1916, 
p.  141. 

M.  H.  Welsford,  Fairplay,  March  8,  1917,  and  Sir  Norman  Hill,  Secy. 
Liverpool  S.  S.  Owners  .Assn.,  Fairplax.  March  4,  1915,  p.  745. 

*  The  Economic   World.  December   11,   1915,  p.  745. 
■  Fairplav,  December  21,  1916,  p.  896. 


BRITISH    COXTROL    AND    OPERATION    OF    SHIPPING  159 

£5G,000;  the  other.  Norwegian,  brought  £83,000  and  jumped  to 
£100.000  in  a  month.' 


Organization  and  Efficiency  of  Ship  Management^ 

1915-1916 

By  the  autumn  of  1910  the  control  of  shipping  was  vested  in 
two  departments,  the  Admiralty  and  the  Board  of  Trade,  and 
three  special  committees :  the  Shipping  Control  Committee,  the 
Ships  Licensing  Committee  and  the  Port  and  Transit  Executive 
Committee.  It  is  no  wonder  that  with  these  five  heads  there 
had  been  an  insistent  demand  for  the  consolidation  of  authority, 
and  the  creation  of  a  Ministry  of  Shipping  which  should  be  able 
t(j  consolidate  these  numerous  and  inevitably  conflicting  authori- 
ties. 

Despite  their  poor  organization  the  government  shipping  de- 
partments did  a  great  work  during  the  first  two  years  of  the 
war.  Some  slight  measure  of  this  work  and  its  difficulties  can 
he  gathered  by  comparing  the  commercial  freight  movements  at 
certain  French  ports  in  19i:i  and  in  1915.  During  this  time  the 
imports  of  Rouen  jumped  from  5,100,000  tons  to  8,000,000; 
Nantes-St.  Xazaire  from  3,100,000  to  4,500.000;  Havre  from 
2.700,000  to  4,500,000;  and  Dieppe  from  470,000  to  770,000 
tons.  All  this  increase  was  in  addition  to  the  work  of  the 
l)ranches  of  the  British  and  French  Government  engaged  in  the 
strictly  military  work,  the  supplying  of  the  armies  which  required 
also  the  movement  of  vast  stores  as  well  as  great  numbers  of 
men. 

The  Amateur  in  Office 

The  attempt  of  the  government  to  so  suddenly  change  and 
increase  its  activities  and  conduct  trade  in  unprepared  places 
naturally  resulted  in  much  confusion  and  gave  rise  to  much  criti- 
cism covering  both  the  conduct  of  affairs  in  port  and  the  opera- 
tion of  ships  at  sea.     In  the  creation  of  a  new  force  to  do  this 

'  Fairplay.  December  23.  1915.  p.  1084. 


100  INFLlKXtK    OF    Til!-:    ORKAT    WAR    LTON    SmriMNC. 

new  work,  Britain  sult'ercd  from  two  of  the  universal  weaknesses 
(jf  mankind:  (1)  tlie  common  desire  of  man  t')  do  something 
he  has  not  practised.  This  desire  often  gets  humored  in  times 
of  emergency,  and  gives  people  the  chance  to  exercise  an  inherent 
egotism  which  makes  so  many  of  us  sure  we  can  do  the  thing  we 
never  did  he  fore,  the  thing  for  which  we  are  not  trained.  Thus 
the(jrists  and  talkers  first  come  to  the  front  and  get  themselves 
placed  in  positions  requiring  knowledge  that  only  exj)crience  can 
give.  The  shipping  fraternity  of  I'.ritain  seemed  generally  sure 
that  in  the  early  days  of  the  war  an  unduly  large  numher  of 
inexperienced  persons  got  in  control  of  shipping.*  A  special 
correspondent  in  the  Gla.ujcm'  Herald  says  (  March  2'.>,  r.'lT.  page 

We  shall  never  he  ahle  to  estimate  the  amount  »»f  harm 
that  the  activities  of  the  rash  amateur  -  have  heen  permitted 
to  do  to  all  industries,  hut  especially  to  shipping. 

(2)  Britain  suffered  from  another  of  the  inherent  weaknesses  of 
humanity  that  tends  always  to  cripple — the  sense  of  caste  superi- 
oritv  which  arises  from  officialism.  In  the  words  oi  Mr.  J.  H. 
Weisford. 

Unfortunately  the  departments  formed  to  deal  with  trans- 
port matters,  owing  to  their  lack  of  experience,  the  over- 
lapping of  departments,  friction,  jealousy  and  other  causes, 
in  attempting  to  handle  this  big  fleet  without  the  cooperation 
of  the  individual  owners,  whom  they  treated  with  contumely, 
have  reduced  the  efficiency,  some  think,  by  50  per  cent.^ 

Ships"  time  seems  to  have  been  wasted  both  at  sea  and  in  port. 

Port  Congestion 

Bad  congestion  of  many  ptDrts  was  one  of  the  first  results  of 
the  necessary  ending  of  free  competition  and  of  supply  and  de- 

'  October  29,  1915,  the  Chamber  of  Commerce  urged  the  enlargement  of 
the  Ships  Licensing  Committee  by  the  "  addition  of  members  with  wide 
experience  of  chartering  and  the  management  of  general  trading  vessels." 
Lloyd's  Weekly,  March  3.  1916.  p.  6. 

"See  also  the  same  point  made  by  Sir  A.  Williamson,  Lloxd's  Weekly, 
November  26,  1915,  p.  759. 

'Fairplay,  March  8,  1917,  p.  421. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  161 

mand  as  controls  of  commerce.  This  arose  very  naturally,  for 
war  trade  was  thrown  in  on  top  of  peace  trade,  and  both  accom- 
panied by  diminution  of  man  power.  It  was  estimated  ^  that  if 
prewar  loading  and  discharging  conditions  could  be  restored  to 
Britain  alone,  it  would  result  in  10  per  cent  increase  in  imports. 
But  French  ports  were  the  scene  of-  the  greatest  delays.  The 
Liverpijol  Shipowners  Association  reported  at  their  annual  meet- 
ing (February,  IDl."))-  that  the  chief  causes  of  port  congestion 
were  (1)  shortage  of  labor  on  quays,  in  the  yards,  and  in  the 
railway  depots;  (2)  heavy  demands  by  the  Admiralty  on  the 
crews  of  mercantile  marine;  (.'3)  absorption  of  tugs,  lighters,  and 
other  appliances  by  the  Admiralty,  and  railway  cars  by  the  army; 
(4)  crowding  of  quays  and  warehouse  space  by  government  im- 
ports of  sugar;  ( fi )  increased  railway  traffic  not  mentioned  by 
the  shipowners  should  be  added  to  this  list.  As  illustrations  of 
some  of  these  claims,  Lloyd's  IVcckly  (December  -'>,  1915,  page 
T7'5)  cites  the  case  of  a  shipowner  who  had  had  goods  bound 
for  Holland  in  a  waterfront  warehouse,  but  owing  to  the  lack  of 
lighters  four  steamers  sailed  without  his  being  able  to  get 
the  goods  alongside.  At  Cardiff  ^  difficulty  of  handling  rail- 
way cars  was  keeping  ships  idle  in  the  port  and  miners  idle 
at  the  mines.  Committees  were  appointed  to  advise  on  con- 
gestion.* 

Some  of  the  specific  steps  made  to  handle  this  situation  were 
the  construction  of  extensive  new  freight  sheds  at  ^Manchester 
and  London.  Perhaps  the  most  revolutionary  single  change, 
however,  was  the  establishment  by  the  Port  and  Transit  Execu- 
tive Committee  in  the  spring  of  191G  of  mobile  battalions  of 
port  workers,  really  gangs  of  green  stevedores  who  were  shifted 
from  place  to  place  to  help  stop  temporary  port  congestion.  As 
this  continued  it  showed  the  possibility  of  interfering  with  the 
established  monopoly  of  a  trade  union,  and  the  proposal  to  en- 
large the  dockers  battalion  to  10,000  in  December,  1916,  was 

'  Fairflav.  ^rarch  16.  1916. 

=  f.lnvd's'lFccklx.  February  5,  1915,  p.  94. 

•  /^fW..  Febniarv  26.  1915,  p.   141. 

*  Ibid.,  Review  of  1915. 


102       inkli:enci-:  of  tiii:  crkat  war  vvos  siiippixr. 

opposed  in  vain  by  tlic  Xational  Transport  Workers  Federation* 
Shortly  before  this  a  royal  proclamation,  issued  under  the  Muni- 
tions of  War  Act.  had  ordered  (llasgow  dock  laborers  back  to 
work  pcndini,^  arbitration  of  the  (juestion  of  hours  and  wages 
because  the  dispute  prejudiced  the  manufacture  and  transport  of 
munitions. 

The  port  congestion  in  I'rance  was  more  inevitable  than  in 
I»ritain.  because  of  the  smaller  number  of  ports,  the  closing  of 
S(Mne  of  her  usual  trade  channels,  and  the  greater  necessity  of 
the  concentration  of  war  sup()lies  at  the  northern  port> 

The  next  trouble  was  lack  of  regularity  in  the  trade,  as 
evidenced  by  the  fact  that  in  London  in  .\oveml)er.  IKl.'),  the 
dock  workers  were  idle,  while  in  the  following  Jaiuiary  twenty 
steamers  were  waiting.  There  had  as  yet  been  no  system  estal)- 
lished  for  the  correlation  (jf  ships,  trade  and  facilities.  (lovern- 
ment  activity  in  trade  had  begun  in  October,  r.>14,  by  extensive 
imports  of  sugar  until  all  the  dock  facilities  of  the  kingdom 
were  crowded  and  ships  lay  in  harbors  with  no  place  to  put  their 
sugar.  Two  years  later  they  had  apparently  not  yet  learned  their 
lesson,  as  evidenced  by  corresponrlence  in  the  Pailx  Mail,  quoted 
in  Fairf^lay,  October  ."»,  1!>1(>: 

A  steamer  with  5.000  tons  of  coal  lay  idle  at  anchor  for 
twenty  days  waiting  for  a  berth  and  occupied  a  further 
seventeen  days  to  discharge  her  cargo.  Thirty-seven  days 
in  port !  During  that  time  she  could  have  made  a  voyage 
across  the  Atlantic  and  back  to  this  side  with  a  cargo  of 
wheat,  and  yet  people  who  cry  for  government  control  com- 
plain of  the  price  of  bread. 

There  is  only  one  dock  with  a  quay  space  of  1.7')0  yards 
at  this  port,  and  yet  the  government,  in  face  of  the  growing 
scarcity  of  tonnage  through  loss  by  submarine,  mine,  and 
other  causes,  crowd  steamers  into  such  ports,  producing  con- 
gestion, delay  and  loss  to  the  nation. 

This  is  only  one  example,  of  one  port,  of  many  similar 
cases,  and  yet  when  I  make  vigorous  protests  to  the  Ad- 
miralty against  extravagant  waste  of   British  tonnage,   its 

'Lloyd's  Weekly,  March  7,  1916.  and  Fairplay,  December  7,  1916. 


BRITISH    COXTROL    AND    OPERATION    OF    SHIPPING  163 

effect  on  food  prices,  and  its  lasting  and  disastrous  results 
to  British  trade.  I  am  informed  that  these  matters  are  de- 
cided by  "  officials  of  wide  experience  in  the  management  of 
steamers  "  !  Heaven  protect  us  from  such  management  and 
such  control.  ( R.  P.  Houston,  shipowner  and  Member  of 
Parliament. ) 

In  the  summer  of  1U15  the  government  appointed  a  comfnittee 
in  Glasgow  to  coordinate  the  naval,  military  and  civil  require- 
ments of  the  port,  and  to  insure  that  the  powers  already  possessed 
in  relation  to  traffic  should  be  used  in  the  most  effective  way  for 
all  parties.  A  shipowner  was  made  chairman.^  This  was  done 
because  a  similar  committee  had  l>een  successful  at  Liverpool.' 
This  first  stcj)  in  coordination  was  urgently  in  need  of  more  far 
reaching  application,  which  has  since  beeamade. 

A  passage  from  the  annual  report  of  the  Anglers  Steamship 
Company  at  the  end  of  1910  ^  is  both  descriptive  of  the  then 
existing  conditions  and  their  needs,  and  also  prophetic  of  those 
that  have  come : 

in  normal  times  a  shipowner  has  many  difficulties  to  sur- 
mount in  order  to  get  a  full  year's  work  into  twelve  months 
of  his  vessel's  life,  and  to  these  are  added  many  more  in  war 
time.  Time  is  wasted  at  sea  not  only  occasionally,  as  in 
peace,  bv  bad  weather,  bad  navigation  or  accidents,  but 
almost  invariably,  by  the  necessity  of  taking  routes  other 
than  the  shortest  in  order  to  avoid  danger  from  submarines, 
mines,  etc.,  while  time  in  port  is  wasted  through  the  ineffi- 
ciency and  insufficiency  of  labor  to  load  or  discharge  the 
cargo,  and  of  the  railroads  and  other  means  of  removing  it 
from  the  quays  and  docks.  One  is  almost  tempted  to  be- 
lieve that  a  radical  cure  can  only  be  effected  by  a  system  of 
centralizing  all  chartering  and  so  allotting  tonnage  that,  so 
far  as  the  chances  of  the  seas  allow,  only  so  many  steamers 
shall  be  bound  to  arrive  together  at  any  one  port  as  that 
port  can  handle.*     At  present,  even  so  far  as  concerns  the 

'  Lloyd's  IVeekh.  August  27,  1915,  p.  55. 

'  Fairplay,  -August  26.  1915,  p.  315. 

•  Ibid..  January  4.  1917.  ,  •  ,        .  (  ,..ar 

♦The  gentleman's  trepidation  at  such  suggestion  after  two  years  of  uar 
would  be  ludicrous  were  it  not  so  serious.  Such  is  the  stuff  against  which 
reforms  must  beat. 


1G4    INFLUENCE  OF  THE  GREAT  W  AK  ITON  SHIPPING 

national  requirements  of  the  Allies,  there  seems  to  he  no 
settled  plan  of  operations.  One  or  more  hranches  of  each 
s^overnmcnt  appear  U)  be  chartering  more  or  less  independ- 
ently (^f  all  the  others.  The  result  is  confusion  which  is 
had  for  all  concerned — not  (piite  all,  as  with  the  ministries 
in  each  capital,  the  various  state  railways  and  semi^overn- 
mental  munition  works  all  bidding  one  aj:;ainst  the  other, 
neutral  and  Japanese  shipowners  reap  a  rich  harvest.  Hav- 
ing fi.xed  his  ves.sel  on  time-charter  at  the  hi^h  rate  resultant 
upon  their  had  organization,  the  shipowner  views  with  e(|ua- 
nimity  the  difticulties  of  the  charterers  which  arise  from  the 
same  cause,  when  she  arrives  at  a  \)()T\.  already  more  than 
full  of  tonnat^'e  all  really  running;  for  the  same  principals 
but  all  rhartt-red  throuf,di  ditYcrcnt  chaimels. 

Lo:^'  lifficicucy  of  Shipping 

The  journals  representin*^  the  shippinj^  interests  fairly  reveled 
in  stories  of  official  inet^ciencies  with  ships,  and  make  clear  to  us 
why  Britain  had  to  reorganize  her  system.  K.  V.  Houston, 
Membe'"  of  Parliament,  criticized 

tiic  way  in  which  requisitioned  ships  had  been  waste  fully 
employed,  and  mentioned  that  a  10.000  ton  liner,  for  which 
the  government  were  paying  -tK ►..')( »o  a  month,  had  been  ly- 
ing in  the  --Egean  Sea  for  some  time  accommodating  about 
40  military  and  naval  officers.  It  was  popularly  known  as 
the  United  Service  Club.^ 

Again 

there  was  great  waste  going  on  in  the  Transport  Department 
in  connection  with  sending  unsuitable  tonnage  for  certain 
purposes.  For  instance  a  fine  passenger  steamer,  carrying 
:200  passengers,  all  the  accommodation  having  been  pracli- 
callv  booked,  and  she  being  ready  to  load,  was  taken  by  the 
Admiralty  and  sent  out  in  ballast  to  Chile.  She  was  an 
unsuitable  boat  for  the  purpose,  burning  considerably  more 
fuel  than  an  ordinary  cargo  steamer,  and  yet  she  was  sent 
the  whole  of -that  distance  in  ballast.     Another  vessel  en- 

•  Lloyd's,  November  5,  1915,  p.  709. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  165 

gaged  in  ore  trade,  which  was  also  taken  over  by  the 
Admiralty,  was  sent  in  ballast  the  whole  way  from  Spain 
to  a  nitrate  port  to  get  a  load  of  nitrates.  She,  too,  was 
an  unsuitable  vessel,  too  small  for  the  trade. 

We  had  these  vessels  going  out  in  ballast  at  a  time  when 
we  knew  that  the  Argentine  railways  were  hungering  for 
coal,  and  were  being  compelled  to  pay  much  higher  freights 
for  the  few  vessels  available.  If  we  had  had  practical 
people  managing  this  business,  and  if  these  people  had 
known  the  needs  of  the  Admiralty  in  advance,  they  could 
have  laid  out  the  tonnage  in  such  a  way  as  to  avoid  this 
wasteful  extravagance.^ 

In  the  winter  lULJ-li;,  with  freight  rates  higher  than  ever 
before  in  the  history  of  the  world,  seventy  good  steamships  were 
allowed  to  get  caught  in  the  ice  and  spend  the  winter  at  Arch- 
angel. In  the  winter  of  1910  a  shipowner  reported"  that  his 
vessel  had  been  under  government  requisition  for  437  days,  of 
which  she  had  lain  in  port  373  days,  in  one  case  with  a  cargo 
of  coal  so  lung  unloaded  that  it  fired  from  spontaneous  com- 
bustion. Another  glaring  case  was  the  much  talked-of  episode 
of  the  tankers  fitted  up  for  troop  transport  ^  but  not  used. 

Perhaps  the  worst  example  of  all  is  the  story  of  the  steamer 
that  had  six  destinations  assigned  to  her  before  she  finally  got 
started,  and  then  she  went  on  service  for  which  she  was  not 
fitted.     She  was 

'  Lloyd's.  November  26,  1915.  p.  759. 

'  /-airplay.  February  24,  1916. 

'  Mentioned  by  Sir  A.  \\'illiainson  in  the  House  of  Commons  on  the  18th 
of  November  last.  "  I^st  February  (1915)  ten  oil  tankers  were  requisitioned 
by  the  -Admiralty,  and  at  great  expense  four  of  them  were  completely  and  six 
roughly  fitted  for  the  transport  of  troops.  After  the  cost  had  been  incurred, 
inquiries  apparently  were  made  as  to  their  fitness  for  the  desired  purpose, 
when  it  was  discovered  that  their  low  speed  rendered  them  unsuitable.  But 
it  was  not  until  the  following  August  that  the  boats  were  handed  back  to 
the  owners,  never  having  been  put  to  any  useful  purpose  whatever  in  the 
interval.  That  little  transaction  must  have  cost  the  country  one  way  or 
another  about  £800,000.  ...  A  small  steamer  was  requisitioned  to  carry 
coal  to  an  East  Coast  port,  and  under  the  departmental  system  she  managed 
to  accomplish  two  coasting  trips  in  precisely  the  same  time  as  that  in  which 
she  usually  completed  five  when  run  by  her  own  owner.  .  .  .  Two  vessels  of 
like  capacity  were  requisitioned,  one  at  the  time  being  in  Canada,  the  other 
on  this  side.  In  order,  I  suppose,  to  avoid  all  invidious  distinctions,  each  was 
sent  in  ballast  across  the  Atlantic."     {Fair play,  January  20,  1916,  pp.  90-92.) 


IGO  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

loaded  with  a  cargo  of  coal  in  this  country  for  Archangel, 
and  the  necessary  insurances  were  effected.  Xo  sooner  was 
this  done  than  the  authorities  altered  the  destination  to  the 
Meditcrnnican,  and  requested  the  owner  to  cover  the  altered 
risk.  This  he  did.  when  the  authorities,  who  evidently 
imagined  that  they  were  engaged  in  a  game  of  general  post, 
decidcil  next  to  send  the  boat  to  the  White  Sea,  and  notified 
the  owner,  who  had  only  just  time  to  change  his  insurances 
when  the  vessel's  destination  was  once  again  altered  to  the 
Mediterranean,  and  then  instructions  were  again  received 
that  she  was  really  to  go  to  .Archangel  after  all.  Ultimately, 
when  everything  was  arranged  and  the  lx)at  was  about  to 
sail  for  the  last  named  destination,  after  Lloyd's  and  the 
company's  offices  were  closed,  the  authorities  decided  to  or- 
der her  immeiliate  disj)atch  to  the  Mediterranean,  e.xpre^sing 
their  unbounded  surprise  when  the  owners  informed  them 
that  this  could  not  be  done,  as  it  would  Ix^  impossible  to  rover 
her  for  the  voyage  in  the  absence  of  uiKJerwriters.  In  the 
end.  and  after  the  vessel  had  been  delayed  for  a  number  of 
days,  the  necessary  insurances  were  in  fact  carried  out  and 
the  vessel  proceeded,  .\fter  such  an  exhibition  of  business 
cai)acity  it  comes  almost  as  an  anticlimax  to  hear  that  the 
boat,  not  being  fitted  in  any  way  for  an  Eastern  voyage,  was 
sent  through  the  Suez  Canal ;  that  being  unsuited  for  such  a 
purpose,  she  was  utilized  as  a  tug.  and  that,  although  every- 
body outside  the  great  commercial  departments  of  state  is 
not  permitted  to  forget  that  tonnage  is  urgently  wanted, 
she  has  at  the  time  of  writing  still  part  of  her  original 
cargo  on  board,  and  will  not  be  free  until  probably  next 
month/ 

It  is  true  that  in  the  spring  of  1910  even  so  good  an  enemy  of 
officialism  as  Fairplay  reported  that  the  mistakes  in  the  govern- 
ment operation  of  steamers  were  growing  less,  but  plainly  there 
was  need  of  reorganization,  which  came  with  the  creation  of  the 
Ministry  of  Shipping  in  December,  191C. 

Before  it  came  about  the  licensing  of  all  voyages  except  those 
in  the  coasting  trade  had  been  begun,  by  order  of  council,  March 
1,  1916.  In  May,  191.j.  the  licensing  of  coal  exports  had  been 
begun."     This  reduced  the  price  of  coal  from  2J:  to  14s.  per  ton, 

'  Fairplav.  September  21,  1916.  p.  394. 
=  Lloyd's  Weekly,  August  16,  1915. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  IGT 

hut  the  dearth  of  coal  shipments  to  the  French  ports  shows  that 
even  these  provisions  failed  to  bring  efficient  results,  for  many 
steamers  had  to  cross  the  Channel  to  Wales  for  bunker  coal,  at 
great  waste  of  time  and  danger  from  submarines.' 

On  December  1,  1015,  Order  in  Council  provided  that  no 
British  ship  could  carry  cargo  from  one  foreign  port  to  another 
without  license  from  the  Ship  Licensing  Committee."  In  the 
early  months  of  191(1  the  powers  of  licensers  were  enhanced  bv  a 
>ystem  of  import  prohibitions.^ 

Crkation  and  Work  of  the  Ministry  of  Shipping 

The  steadily  increasing  power  that  had  been  given  to  the 
various  committees,  such  as  the  licensing  of  exports,  of  imports, 
of  particular  voyages,  etc.,  really  gave  possibilities  of  increased  in- 
efficiency through  lack  of  system  or  coordination  in  the  work  of 
the  various  departments,  as  indicated  in  some  of  the  above  de- 
scribed occurrences.  Accordingly  the  natural  next  step  of  put- 
tmg  it  all  under  one  authority  was  finally  taken,  December,  1916, 
by  the  creation  of  the  Ministry  of  Shipping,  which  was  placed 
under  the  control  of  Sir  Joseph  Maclay,  described  by  Lloyd 
George  as 

a  very  shrewd,  able,  and  experienced  shipowner,*  who  has 
the  caution  of  his  race.  He  is  at  the  head  of  our  shipping 
department,  and  has  practically  the  whole  shipping  of  this 
country  for  the  first  time  under  control  and  requisition. 
What  does  that  mean?  It  means  that  the  ships  of  this 
country  are  going  to  be  concentrated  henceforth  upon  the 
essential  and  vital  trade  of  the  country.  There  was  a  good 
deal  of  trade  done  by  this  country  in  times  of  peace,  very 
essential  and  very  profitable;  but  it  is  important  now  that 
we  should  consider  what  is  vital  to  the  life  of  the 
nation.^ 

'  Fairplax.  August  23,  1917,  pp.  314-316. 

'  Lloyd's' ll'ccklw  November  12,  1915,  p.  729. 

•  Ibid..  March  3."  1916. 

•  Of  the  firm  of  Maclay  &  McAndrews. 

•  Lloyd's  Weekly  Review,  May  14,  1917,  p.  7. 


IGS  INFLUENCE    OF    THE    GREAT    WAR    LTON    SHIPPING 

Mr.  Maclay  was  accepted  by  tlie  shipping  fraternity  as  the 
answer  to  tlieir  requests  for  unity  and  a  practical  man.  He 
issued  an  open  call  that  the  public  might  inform  him  of  inefficien- 
cies in  the  service. 

The  Controller  of  Shipping  will  consider  it  a  favor  if  dock 
authorities,  steamship  owners  and  labor  organizations, 
through  their  representatives,  will  advise  him  from  time  to 
time  of  any  detentions  and  delays  in  harl)ors  at  home  or 
abroad  from  any  cause  whatsoever  which,  in  their  opinion, 
might  be  obviated. 

lie  then  went  cm  tn  point  nut  iliat  thi>  had  only  come  after 

we  have  been  at  war  for  two  and  a  half  years,  and  tonnage 
has  been  wasted  in  a  prodigal  way  practically  the  whole 
time.^ 

Within  six  months  after  his  appointment  Lloyd's  Weekly  pointed 
out  (May  '"^.  11^>17)  that  the  inefficiency  charges  in  the  operation 
of  shipping  were  declining. 

Mr.  Maclay  instituted  two  drastic  changes  in  policy:  ( 1 )  he 
asked  for  a  heavy  reduction  in  imports,  which  was  shortly 
granted  by  the  government,  although  it  had  been  asked  for  by 
the  Glasgow  shipowners  a  year  before."  At  the  time  of  the 
institution  of  the  changes,  it  was  generally  recognized  that  many 
commodities  could  be  spared.  Along  with  the  restriction  of 
imports  Mr.  Maclay  created  a  priority  committee  to  deal  with 
restrictions  in  shipping.^  (2)  Controller  Maclay's  second  big 
move  was  to  greatly  extend  the  requisitioning  of  British  shipping. 
When  he  took  office  about  half  the  available  tonnage  was  under 
requisition  by  the  state.  The  great  majority  of  these  vessels 
were  tramps,  the  liners  with  few  exceptions  remaining  unrequisi- 
tioned  and  running  under  license  in  their  ordinary  trades.  In  the 
course  of  a  few  months  the  ministry  brought  practically  the  whole 

^Fairplax,  February  1.  1917,  p.  178. 

-  Ibid..  January  27.  1916. 

^  Glasgoisj  Herald,  December  29,  1917,  p.  36. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  ]  69 

of  the  British  ocean-going  mercantile  marine,  Hners  as  well  as 
tramps,  under  requisition  at  Blue  Book  rates.  With  this  ex- 
tended control,  the  government  was  able  to  redirect  vessels  by 
withdrawing  tonnage  from  distant  trades  and  putting  it  into  near 
traders.  The  efficiency  of  a  ship  was  greatly  increased  and  the 
given  tonnage  handled  much  more  trade.  Even  the  capacity  of 
the  ships  themselves  was  increased  on  these  shorter  voyages,  be- 
cause of  the  smaller  space  required  for  bunker  coal. 

How  THE  Ministry  of  Shipping  Operated  Ships 

It  is  easy  to  regard  this  seizure  of  the  nation's  shipping  as 
being  more  of  a  revolutionary  act  than  it  was.  Examination  of 
the  actual  method  shows  that  it  is  much  more  a  problem  of  con- 
trol than  of  operation.  The  government  had  no  organization  to 
handle  such  a  vast  mass  of  shipping,  nor  has  it  created  one. 

The  government  recognizes  that  the  state  can  not  provide 
any  organization  capable  of  working  the  smaller  cargo 
steamships.  It  is  equally  true  that  the  state  can  not  provide 
any  organization  capable  of  working  the  ocean-going  steam- 
ship. By  stretching  the  prerogative  of  the  Crown,  the 
vessels  themselves  have  been  requisitioned,  but  the  govern- 
ment is  now  appealing  to  the  shipowners,  whose  vessels  have 
been  taken,  to  continue  to  carry  on  with  those  same  vessels 
the  business  which  they,  the  shipowners,  are  alone  capable 
of  carrying  on — and  it  is  asking  the  shipowners  to  render 
these  services  to  the  nation  without  any  profit  to  themselves.^ 

What  really  happened  was  that  they  commandeered  the  ships  and 
then  virtually  also  commandeered  the  old  organizations  that  ran 
the  ships. 

The  lines  continue  in  their  usual  trades,  committees  com- 
posed of  representatives  from  each  section  being  formed 
under  distinctive  titles  such  as  the  River  Plate  Conference, 
Indian  Conference.  Mediterranean  Conference,  etc.,  and  to 
these  conferences  the  ^Ministry  of  Shipping  issue  directions 

^Lloyd's  Weekly.  May  18,  1917,  p.  5. 


170  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

as  to  the  nature  and  quantities  of  the  goods  to  be  carried. 
All  details  are  left  to  the  management  of  the  individual 
lines.  Both  tramps  and  lines  are  paid  Blue  Book  rates  of 
hire,  and  all  freights  are  accounted  for  to  the  government. 
Rates  of  freight  under  these  conditions  can  not  go  higher 
than  the  government  are  prepared  to  allow  them,  but, mer- 
chants can  only  ship  such  articles  as  are  considered  essential 
for  the  country's  requirements.  There  is  consequently  no 
competition  between  shippers  or  between  one  market  and 
another,  and  tonnage  is  directed  to  where  it  is  most  wanted. 
The  machinery  existing  for  this  complete  control  of  shipping 
is  naturally  vast.  In  the  summer  of  r.>17  about  10,000  peo- 
ple were  employed  in  the  London  offices  of  the  Ministry  of 
Shipping.^ 

Although  this  machinery  may  be  vast,  it  is  simplicity  itself  in 
comparison  to  the  actual  task  of  running  the  vessels. 

With  regard  to  the  tramps,  the  problem  and  the  method  differ 
in  part  from  that  used  with  liners.  Some  of  the  tramps  that 
are  doing  civil  work,  such  as  carrying  grain,  sugar,  nitrate,  are 
operated  as  of  yore  by  shipping  firms  who  know  how  and  act  as 
agents  for  the  Transport  Department.  But  the  Transport  Depart- 
ment of  the  Admiralty  has  long  operated  ships,  and  the  British 
Government  is  now  operating  a  part  of  the  many  tramps  under 
its  control. 

They  are  being  worked  directly  by  the  Department  of  the 
Ministry  of  Shipping.  Cargoes  are  arranged,  loaded,  and 
discharged  entirely  under  government  orders,  while  the  man- 
agers or  owners  simply  attend  to  the  provision  of  a  crew, 
stores  and  general  upkeep  of  the  steamer. 

The  Naval  Sea  Transport  Branch  provides  for  the  car- 
riage of  millions  of  tons  of  liquid  fuel  and  coal  a  year,  its 
collier  section  alone  employing  hundreds  of  vessels  and 
handling  a  monthly  average  of  well  over  a  million  tons  of 
coal.  In  eight  months  of  1917,  the  Military  Sea  Transport 
Section  moved,  in  round  figures,  1,000,000  people,  12,000,- 
000  tons  of  stores,  300,000  animals,  and  100,000  guns  and 
vehicles.     In  practically  the   same  period  the   Commercial 

*  Glasgoiv  Herald,  December  29,  1917,  p.  35. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  171 

Branch  provided  for  the  loading  of  milHons  of  tons  of 
cereals,  sugar,  iron  ore,  timber,  pyrites,  flax,  metals,  and 
fodder.  Its  aggregate  shipments  in  nine  months  were,  as 
a  matter  of  fact,  well  on  towards  13,000,000  tons/ 

This  work  had  to  be  done,  as  did  much  of  the  civilian  work  also, 
under  the  limitations  of  the  convoy  system,  which,  a  British  ship- 
owner reports,-  have  resulted  in  a  delay  of  28  per  cent  in  time  on 
thirty  particular  voyages. in  comparison  to  similar  voyages  of  the 
same  vessels  without  the  troubles  of  convoy. 

The  many  small  vessels  of  the  British  coasting  trade  were, 
with  their  work,  such  a  complex  that  the  government  from  sheer 
fear  of  details  of  the  job  let  them  alone  when  it  took  shipping 
engaged  in  the  foreign  trade.  But  as  early  as  1916  the  coasters 
had  begun  to  take  advantage  of  the  situation  by  putting  their  rates 
up  to  such  a  point  thai  it  was  cheaper  to  send  by  rail  than  by 
boat  from  British  port  to  port.^  This  unwonted  and  before  un- 
heard-of condition  was  naturally  confusing  to  the  railroad  situa- 
tion, and  accordingly  the  Shipping  Controller  made  a  rather  be- 
lated announcement  *  setting  maximum  rates  in  the  British  coast 
trades  for  the  carriage  of  the  raw  materials  for  iron  making,  and 
intimates  that  other  rate  controls  will  follow. 

Nationalization  of  the  British  Mercantile  Marine  and 
Shipping  Business 

It  seems  that  it  would  be  difficult  to  figure  out  many  more 
controls  that  the  British  Government  might  enforce  upon  the 
British  ships  and  shipping  business,  which  for  the  present  have 
been  nationalized  in  operation  and  in  part  in  ownership.  Mr.  T. 
Patterson  Purdie,  Chairman  of  the  Clyde  Steamship  Owners 
Association,  and  member  of  the  government's  Ships  Licensing 
Committee,  in  an  address  before  his  association  early  in  1917, 
summarized  under  thirteen  heads  the  very  extensive  controls  that 

'  Glasgow  Herald.  December  29,  1917,  pp.  35-36. 
'Ibid.,  Januarv  17,  1918,  p.  161. 
'Ibid.,  April  27.   1916. 
*  Ibid.,  January  3,  1918. 


172  INFLUENCE    OF    THE    GREAT    WAR    L  TON    SHIPPING 

were  in  force  two  months  after  Shipping  Controller  Maclay  was 
appointed. 

It  is  advisable  that  I  should  here  recapitulate  some  of  the 
controls  over  British  shipping  instituted  by  the  government 
which  have  been  in  force  during  the  past  year,  in  order  to 
show,  to  some  degree,  the  conditions  under  which  our  mer- 
cantile marine  has  been  working : 

(a)  Fifty  per  cent  to  sixty  per  cent — embracing  every 
type  of  British  mercantile  ship — is  under  requisition  to  tlie 
government  and  employed  in  Admiralty  and  military  service 
at  Blue  Book  rates,  which  admittedly  arc  the  very  essence  of 
limitation. 

(b)  All  ships  for  the  carriage  of  sugar  cargoes  and  Aus- 
tralian wheat  are  put  under  re(|uisition  and  paitl  for  at  Blue 
Book  rates. 

(c)  Freight  limitations  have  been,  and  are,  in  force  as  far 
as  practicable  per  British  steamers. 

(d)  All  refrigerated  ships  and  oil  tankers  are  operated  on 
government  account  and  at  fixed  rates. 

(e)  All  regular  liners — not  requisitioned — are  under 
obligation  to  carry  a  fixed  proportion  of  cargo  at  fixed  rates 
of  freight. 

(f)  Cargo  steamers — not  requisitioned — are  directed  to 
perform  specific  voyages  and  to  transport  specific  cargoes  on 
fixed  terms  and  conditions. 

(g)  No  British  vessel  over  500  tons  gross  register  can 
proceed  on  any  voyage  without  first  obtaining  a  license  for 
the  specific  voyage  intended.  Here,  again,  control  is  the 
order  of  the  day,  because  licenses  are  refused  by  the  Ship 
License  Committee,  unless  the  particular  voyage  is  deemed 
to  be  in  the  best  interests  of  the  national  requirements  and 
those  of  our  Allies.  Shipowners  throughout  the  United 
Kingdom  know  only  too  well  how  licenses  have  l)een  refused 
for  legitimate  trading  on  many  occasions,  and  have  accepted 
the  Licensing  Committee's  decision  without  demur,  knowing 
that  it  acted  solely  in  the  best  national  interests  with  the 
knowledge  it  possessed,  and  that  national  interests  were 
supreme  and  paramount  over  all  individual  or  other  interests. 

(h)  A  certain  proportion  of  our  mercantile  marine  is 
placed  at  the  disposal  of  the  Allies  for  their  emergent  war 
demands  at  Blue  Book  rates. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  173 

(i)  The  government  has  taken  over,  arbitrarily,  as  emer- 
gent demands  arose,  absolute  possession  of  some  mercantile 
ships  building,  or  at  work,  most  suitable  for  its  requirements. 
regardless  of  shipowners'  private  interests,  and  left  the  latter 
to  accept  its  ideas  of  price,  or  arbitrate. 

(j)  Shipowners  having  ships  building  even  under  prewar 
as  well  as  postwar  contracts  have  had  to  pay,  owmg  to 
increased  wages  and  costs  of  materials,  substantial  sums  m 
addition  to  their  contract  prices  to  enable  the  ships  and  their 
engines  to  be  completed.  As  regards  these  new  vessels 
which  have  no  prewar  datum  line  of  profits,  they  are  only 
allowed.  under  the  new  Finance  Act,  6  per  cent  profit  on  the 
capital,  and  4  per  cent  on  the  first  cost  of  the  ship,  which 
is  an  altogether  unsound  and  unremunerative  basis,  and  has 
effectually  prohibited  the  building  or  acquisition  by  private 
enterprise  of  further  tonnage  at  existing  inflated  prices,  at 
a  time  when  additional  British  ships  are  an  urgent  ana 
clamant  necessitv. 

(k)  Ml  shipping  contributes  to  the  state  60  per  cent  ot 
anv  excess  profits  earned  over  the  prewar  standard  plus  5s 
per  pound  of  taxation— or  in  the  case  of  new  vessels,  the  0 
per  cent  standard  on  capital— after  allowance  of  4  per  cent 
depreciation  on  first  cost,  which  has  for  years  been  the  basis 
allowed,  and  as  shipping  revenues  are  derived  and  profits 
earned  principallv  from  foreign  countries,  all  revenues  to  the 
state  in  the  shape  of  taxes  from  British  shipping  constitute 
a  material  contribution  to  every  man,  woman  and  child 
throughout  the  United  Kingdom.  . 

(1)  Ever V  British  ship  has  to  conform  to  certain  regula- 
tions necessarilv  imposed  in  these  abnormal  times  upon  them, 
which  add  materiallv  to  their  working  cost,  as  well  as 
lengthen  the  time  on  (their)  voyages,  which  lessens  their 
efticiencv  and  carrying  power. 

(m)  Xo  British  vessel  can  be  sold  or  transferred  to  any- 
one except  Britishers.' 
Soon  after  coming  into  power,  the  Controller  extended  requisi- 
tions to  virtually  all  British  vessels,  and  the  unrequisitioned  liners 
which  had  been  ordered  to  hold  a  share  of  their  space  for  govern- 
ment disposal  each  voyage  saw  the  percentage  gradually  creep  up 
•  Fairplay,  February  15,  1917,  p.  307,  also  Marine  Revieu'.  July,  1917. 


174  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

from  10  to  20,  to  30,  to  40,  to  00,  to  80,  until  with  the  bef^inning 
of  11)18  in  most  services  100  per  cent  of  tlie  Hner  space  was  on 
government  order. 

To  make  the  control  even  more  tight,  Britain  was  not  content 
to  let  even  one  Britisher  sell  a  ship  to  another,  for  an  Order  in 
Council  published  in  the  London  Gazette,  February  1«>,  l'.»17, 
states  that 

A  ])erson  shall  not  without  permission  in  writing  from 
the  Shipping  Controller,  directly  or  indirectly,  and  whether 
on  his  own  behalf  or  on  behalf  of  or  in  conjunction  with  any 
other  person,  purchase  or  enter  into  or  offer  to  enter  into 
any  agreement  or  any  negotiations  with  a  view  to  an  agree- 
ment for  the  purchase  of  any  ship  or  vessel. 

A  little  later  on  it  was  enacted  that  no  British  ship  should  be  sold 
to  a  foreigner,  without  the  consent  of  the  Board  of  Trade,  for 
three  years  after  the  war.^  Then  further  to  clarify  the  matter  of 
sale  of  ships,  the  above  mentioned  regulation  of  February,  1917, 
was  amended  "  to  make  it  clear  that  the  purchase  of  shares  in  a 
ship  or  vessel  or  any  stock,  debenture,  or  other  security  by  which 
a  person  might  gain  control  of  a  ship  should  be  construed  as  the 
purchase  of  the  ship  itself. 

February  15,  1018,  an  Order  in  Council  amended  the  Defense 
of  the  Realm  Regulations  by  providing  that  every  contract  for 
the  chartering  of  British  ships,  and  every  contract  made  in  the 
United  Kingdom  for  the  chartering  of  any  ships  not  British 
must  contain  provision  making  the  validity  of  the  contract  con- 
ditional on  approval  of  the  Shipping  Controller.  It  would  be 
difficult  to  see  how  the  driver  of  a  motor  truck  in  the  Quarter- 
master's Department  of  the  army  could  be  more  subject  to  gov- 
ernment, more  a  part  of  the  government  machine. 

Shipping  as  a  Source  of  Revenue 

It  has  been  said  that  Britain  has  used  her  shipping  to  reduce 
the  cost  of  living  within  the  Empire,  and  has  sent  her  ships  out 

'  Fairplay,  October  18,  1917,  p.  654. 

*  U.  S.  Commerce  Reports,  February  14,  1918. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  l75 

as  tax  gatherers  to  bring  revenues  from  foreign  lands.  Both  of 
these  statements  savor  strongly  of  the  truth,  as  evidenced  by  the 
statement  of  Mr.  J.  H.  Welsford  {Fairplav,  March  8,  1917,  page 
421): 

A  simple  calculation  can  be  made,  showing  the  difference 
between  what  this  tonnage,  requisitioned  at  Blue  Book  rates 
by  the  government  today,  would  earn  at  the  rates  which 
neutral  shipping  is  obtaining.  From  which  it  will  be  clear 
that  the  shipowners'  contribution  to  the  state  in  services  can 
be  conservatively  valued  easily  at  £300,000,000  per  annum, 
while,  in  addition,  during  the  last  fifteen  months,  the  con- 
tributions in  excess  profits  have  been  over  one  hundred  mil- 
lion pounds. 

Such  income  as  shipowners  may  get  is  still  further  subject  to 
income  tax.  Even  further  than  this  the  shipowners  claim,  as  a 
grievance,  that  the  government  itself  has  been  in  many  cases 
making  the  direct  profit  by  charging  more  for  the  use  of  ships 
than  it  pays  their  owners.  Upon  being  questioned  in  Parlia- 
ment Sir  Leo  Chiozza  Money,  representing  the  Shipping  Control- 
ler, admitted : 

that  British  liner  steamers  loading  on  the  berth  at  Buenos 
Aires  for  Liverpool  were  directed  by  the  government  to 
charge  50s.  to  o2s.  6d.  per  ton  on  government  cargo,  and  as 
high  as  250s.  per  ton  on  cargo  for  civil  and  commercial  pur- 
poses, the  steamers  being  under  requisition  and  the  owners 
only  receiving  payment  at  Blue  Book  rates,  any  profits  ac- 
cruing going  to  the  government.^ 

And  again  Fair  play  points  out  editorially  (August  23,  1917,  page 
314): 

It  is  obvious  to  a  child  that,  inasmuch  as  the  government 
pay  British  shipowners  only  Blue  Book  rates  and  charge  full 
current  market  rates  on  all  our  exports,  and  various  rates 
above  Blue  Book  rates  on  our  imports,  and  full  rates  on 

'  Fairplay,  Augyst  16,  1917,  p.  270. 


17G  INFLUENCE    OF    THE    GREAT    WAR    IPON    SHIPPING 

goods  consigned  from  the  East  to  other  ports  **  sume  "  profit 
must  he  secured — in  one  case,  for  instance,  tlie  freight  col- 
lected was  t.')!). (>()(>.  and  the  owner  received  about  tJ.noo. 

On  Tuesday,  last  week,  Sir  Leo,  in  answer  to  Sir  Walter 
Ruiiciman,  endeavored  to  explain  that  "  the  pt)licy  of  the 
Ministry  of  Shipj)ing  is  to  charge  the  equivalent  of  Blue 
Book  rates  where  the  benefit  of  the  low  freight  would  accrue 
to  the  consumer — that  is.  where  the  commodity  is  one  of 
which  the  supplies  are  controlled — and  to  charge  full  market 
rates  where  the  benefit  of  a  lower  rate  would  l)e  likely  to 
go  (hnvn  to  the  producer,  merchant,  or  middleman,  with  no 
advantage  to  the  con>umer." 

To  the  outsider  this  seems  like  the  height  of  wise  policy. 

In  addition  to  the  direct,  there  are  indirect  ways  of  getting 
money  nut  of  the  steamers.  Thus*  it  is  pointed  out  that  by 
handing  the  vessels  over  to  the  Allied  Ciovernments  at  Blue  Book 
rates  and  making  the  Allied  (iovernments  .ts>,nme  the  war  ri^^k, 
the  British  (iovcrnmcnt  makes  a  profit. 

Ships  have  also  been  made  a  source  of  profit  through  the  prices 
they  paid  for  coal. 

One  instance  of  the  e.xtent  of  government  exploitation  of 
our  major  industry  must  suffice :  An  owner  having  carried 
a  cargo  of  coals  to  .Mexandria  for  the  Admiralty  on  l>lue 
Book  terms  was  allowed  the  privilege  of  conveying  an'?ther 
cargo  to  this  country  from  India  at  a  very  low  rate,  but  on 
condition  that  he  bought  ♦)')0  tons  of  bunkers  from  the  gov- 
ernment at  W  10s.  a  ton.  What  was  the  result?  Just  this, 
that  on  the  making  up  of  accounts  instead  of  receiving  any 
freight  from  the  government  for  the  outward  voyage,  the 
owner  actually  had  to  pay  them  a  small  balance  in  respect 
of  the  coal  on  which  they  had  made  over  ^')  per  ton  profit." 

The  Maintenance  of  the  Private  Fleets  of  British 
Merchantmen 

Altogether  the  financial  status  of  British  shipowners  has 
greatly  declined  in  the  period  of  the  fuller  nationalization.     As 

'  Fairplax.  December  13,  1917.  p.  979. 
"■Ibid.,  March  8,  1917.  p.  514. 


BRITISH    CONTROL   AND   OPERATION    OF    SHIPPING  177 

an  evidence  of  this  the  earnings  of  the  International  Mercantile 
Marine  Co.  operating  liners  declined  from  £20,100,000  in  1916 
to  £11,500,000  in  1917.  During  the  period  of  partial  requisition- 
ing, the  British  press  rang  with  complaints  of  shipowners  and 
their  friends,  because  the  government  would  not  grant  war  risk 
insurance  sufficient  to  replace  a  ship  when  she  was  destroyed. 
Thus  a  shipowner  saw  himself  in  a  position  of  having  a  ship 
today  worth  in  the  open  market  £240,000,  and  after  she  was 
torpedoed  he  found  himself  in  possession  of  a  claim  against  the 
government  for  £l«j(),000  insurance,  which  might  he  paid  some 
months  later  anil  was  entirely  inadequate  to  replace  his  steamer 
at  present  prices,  although  that  sum  may  perhaps  build  him  two 
ships  three  or  four  years  after  the  war  ends. 

.Mr.  W.  J.  Noble  in  seconding  a  protest  to  the  government  in 
the  North  of   luigland  Steamship  Owners  Association  meeting 

said  : 

Taking  the  actual  sums  received  in  respect  of  V.)  specific 
vessels  from  the  commencement  of  the  war,  plus  deprecia- 
tion, the  aggregate  amounts  were  little  more  than  one-half 
the  sum  reijuired  to  replace  the  tonnage  on  the  basis  of  pres- 
ent shipbuilding  prices  offered  by  neutral  owners  for  new 
tonnage.' 
While  the  shipowner  had  the  chance  for  a  part  of  his  fleet  to 
be  free  and  get  the  high  rates  of  the  market,  he  had  some  possi- 
bility of  setting  aside  profits  to  get  more  ships  even  at  war  prices, 
but  when  the  whole  of  the  British  fleet  went  under  requisition  at 
Blue  Book  rates,  the  possibility  of  replacement  or  private  exten- 
sion of  shipping  Ijecame  virtually  nil.  for  the  price  and  cost  stayed 
at  phenomenal  figures  and  the  ship's  earnings  were  ever  growing 
less  because  of  a  fixed  Blue  Book  rate  and  the  steadily  increasing 
costs  of  operation.      The  situation  is  well  shown  by  the  statement 
nf  W.  11.  Kaeburn  in  a  presidential  address  before  the  Chamber 
of  Shipping  of  the  United  Kingdom  in  March.  1917: 

What  are  called  Blue  Book  rates  were  moderate  enough, 
all  things  considered,  when  they  were  agreed  upon  with  the 
government  at  the  commencement  of  the  war:  but  everybody 
•  Lloyd's  IVcckly  Review.  October  19,  1916,  p.  5. 


178  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

knows  tlie  cost  of  running  ships  has  far  more  than  doubled 
itself.  Up  to  a  certain  time  it  is  perfectly  true  that  ship- 
owners were  making  large  profits  through  having  a  fair 
proportion  of  their  tonnage  free  of  requisition:  hut  grad- 
ually the  percentage  of  requisitioned  ships  has  increased 
until  now  there  are  very  few  vessels,  which  are  not  running 
at  either  Blue  Book  rates  or  freights  restricted  by  the  state. 
I  now  hear  that  all  liners  have  been  commandeered.  Tak- 
ing into  account  the  heavy  increase  in  the  cost  of  insurances, 
the  enormous  prices  paid  for  upkeep  and  repairs,  and  the 
time  vessels  are  off  hire  doing  necessary  repair  work,  not 
to  speak  of  our  having,  at  our  own  expense,  to  provide  gun 
mountings  and  pay  and  feed  the  gunners,  the  Blue  Book 
rates  leave  no  margin  for  fresh  enterprise.  In  the  case  of 
steamers  which  have  been  completed  at  war  prices,  there  is 
not  even  as  much  margin  as  will  cover  ordinary  depre- 
ciation,^ 

As  to  the  profit  aspect  of  Blue  Book  rates,  a  few  months  later 
Mr.  Bonar  Law.  in  introducing  the  budget  in  Parliament,  said : 

I  have  myself  e.xamined  something  like  a  score  of  accounts 
of  typical  ships — and  that  is  a  kind  of  examination  that  I 
am  really  competent  to  make  on  my  own  account — and  in 
not  one  of  those  cases  was  it  possible  for  them  under  the 
requisition  terms  to  make  anything  like  prewar  rates  of 
profit.  I  wish  the  House  to  realize  that.  Many  of  them 
show  a  loss.  But  my  point  is  that  it  is  impossible  under 
the  requisition  terms  to  make  even  a  prewar  scale  of  profits." 

The  bankruptcy  of  a  company  that  started  in  the  ship  business 
on  the  high  prices  of  lUlO,  largely  on  borrowed  money,  is  there- 
fore a  very  natural  proceeding  ^  for  the  simple  reason  that  the 
ships  being  requisitioned  the  company  could  not  pay  the  interest 
on  the  mortgage,  and  the  stock  was  valueless. 

The  war  brought  two  other  troubles  to  the  British  shipowner 
with  his  fixed  Blue  Book  income.  One  is  the  delays  due  to  the 
inadequacy  of  docks  for  repair  work.     This  inadequacy  arises 

'  Fairplay.  March  8,  1917,  p.  427. 

=  Lloyd's  Wcekh  Rcviczv,  June  22,  1917,  p.  5. 

''Fairplay,  September  13,  1917.  p.  493. 


BRITISH    CONTROL    AND   OPERATION    OF    SHIPPING  179 

from  the  large  utilization  of  yards  for  naval  work,  the  increased 
repairs  of  merchant  shipping  and  the  shortage  of  labor,  which 
means  altogether  that  the  ships  are  losing  more  time  in  repair 
than  in  peace  times. 

The  second  of  these  troubles  is  increased  wages.  British  labor, 
alert  and  thoroughly  organized,  has  not  failed  to  take  some  ad- 
vantage of  the  opportunities  offered  by  the  war.  After  requisi- 
tioning had  become  almost  universal,  there  was  a  strike  at  Liver- 
pool. Seamen  were  offered  £1  a  month  increase,  but  having 
effective  votes  the  labor  leaders  went  off  to  London  and  through 
political  pressure  won  an  increase  of  rates  from  £8  10s.  and  £9 
per  month  to  £11  and  £11  10s.— £600,000  a  month  from  the 
pockets  of  British  shipowners.^ 

The  tendency  to  sell  out,  and  the  anticipation  of  lower  prices 
before  the  war  ends  -  is  aided  by  some  sense  of  alarm  at  Ameri- 
ca's large  shipbuilding  program.  The  tendency  for  the  tramp 
owner  to  sell  is  further  promoted  by  the  desire  of  British  lines 
to  buy  and  thus  maintain  their  services  and  clientele.  The  only 
way  they  can  do  this  is  to  buy  or  charter  tramps  for  the  work. 
The  smaller  number  of  ships  now  afloat  reduces  the  need  for 
managers  and  owners.  As  a  result  of  all  these  influences  British 
shipowners  are  constantly  leaving  the  trade.' 

All  this  restriction,  reduction  and  inability  to  make  money  or 
increase  his  tonnage  is  very  alarming  to  the  British  shipowner 
who  thinks  of  ships  only  as  private  property  built  by  private 
enterprise.  He  sees  the  Scandinavians  and  Japanese,  and,  up 
to  a  recent  date,  the  Americans,  piling  up  huge  reserves  of  war 
profits  which  he  fears  will  be  used  against  him  in  postwar  period 
when  he  must  fight  to  win  back  the  lost  trade,  if  he  wins  it  back. 
And  he  naturally  views  with  alarm  such  a  proceeding  as  that  of 
the  making  of  many  contracts  late  in  1917  between  British  ship- 
builders and  Norwegian  shipowners  for  vessels  at  £25  per  ton 
for  delivery  after  the  war,  subject  to  the  permission  of  the  British 
Government,   with  the   further  provision  that  any  increase   in 

^  Fahplav.  October  25,  1917,  p.  678,  and  October  11,  1917   p.  602^ 

=  LloYd's  Weekly,  June  1,  1917,  p.  5.     Fairplay,  November  8,  1917,  p.  758. 

"  Fan-play,  February  28,  1918,  p.  410. 


ISO  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

material  or  wages  over  existing  costs  shall  be  added  to  the  price 
of  the  contract.  The  price  represents  at  least  four  times  prewar 
costs,  and  solely  because  of  government  restrictions,  it  is  une 
which  British  shipowners  are  not  in  a  position  to  pay.  These 
particular  contracts  were  the  cause  of  the  Xorth  of  England 
Shipowners  Association  petitioning  the  Shipping  Controller  to 
make  representations  to  the  government  that  it  should  revise  its 
policy  and  "  take  such  steps  as  wimld  enable  the  liritish  owners 
to  rehabilitate  the  British  mercantile  marine."'  '  In  the  meantime 
the  British  Government  shows  no  signs  of  letting  the  British  ship- 
owner rehabilitate  the  mercantile  marine.  He  can  onlv  do  that 
out  of  war  freight  rates,  and  the  government  is  prohibiting  war 
freight  rates.  But  it  is  nevertheless  building  ships  itself  with 
might  and  main,  and  the  question  of  ultimate  ownership  of  these 
lleets  is  problematical,  although  it  is  generally  expected  that  they 
will  be  sold  after  the  war.  It  is,  however,  scarcely  problematical 
to  predict  that  the  Norwegians  will  wait  a  long  while  for  those 
high  priced  ships  to  be  built  for  them  in  British  shipyards,  for 
the  yards  like  the  ships  are  now  and  probably,  for  a  time  at 
least  after  the  war,  will  be  under  requisition  by  the  British  Gov- 
ernment, which  seems  to  be  maintaining  a  consistent  policy  of 
doing  everything  in  its  power  to  stop  undue  profiteering  in  ship 
operation  and  shipbuilding.  It  is  wisely  preventing  the  paving 
of  war  rates  and  it  is  therefore  preventing  their  capitalization. 
Yet  it  is  striving  to  keep  British  ships  upon  the  seas.  It  is  much 
concerned  about  the  welfare  and  safety  of  the  nation  and  very 
little  concerned  about  the  profits  of  any  group.  This  is  as  it 
should  be.  The  soldier  is  making  no  profits.  He  serves  and  a 
truly  loyal  nation  will  serve  on  the  same  basis.  The  question  of 
the  restoration  of  business  to  the  profit  basis  after  the  war  or* 
leaving  it  on  the  service  basis,  brings  us  face  to  face  with  one 
of  the  war's  greatest  and  most  interesting  results.  At  present 
the  government  is  utilizing  something  it  did  not  make,  namely  the 
commercial  organization  of  peace.  This  peace  organization  has 
made  or  been  compelled  to  make  a  truce  on  profits — for  a  time, 

'  Lloyd's  Weekly  Revieu.',  October  19,  1917,  p.  5. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  ISl 

it  has  been  drafted.  The  government  could  no  more  create  anew 
a  ship  management  than  it  could  create  anew  a  fleet.  The  getting 
of  the  shipping  business  off  the  war  basis  may  be  almost  as  per- 
plexing as  has  been  the  process  of  getting  it  on  to  the  war 
basis. 

The  Loan  of  British  Ships  to  France  and  Italy 

The  British  shipowner  has  exercised  his  national  prerogative 
of  grumbling,  but  he  has  certainly  had  a  fair  amount  of  basis  as 
an  individual  for  this  complaint,  and  perhaps  nothing  has  tended 
more  to  exacerbate  him  than  the  sight  of  the  service  Britain  has 
rendered  her  allies.  A  million  tons  of  British  shipping,  requisi- 
tioned at  Blue  Book  rates,  was  early  handed  over  to  France.  By 
the  oOth  of  July,  1917.  AI.  de  Alonzie,  Under-Secretary  of  State, 
reported  in  the  French  Chamber  that  the  amount  had  reached 
2,000,000  tons.^  While  this  was  going  on,  a  considerable  por- 
tion of  the  French  commercial  fleet  was,  until  midsummer  of 
1917,  in  nowise  controlled  as  to  freights,  being  free  to  go  upon 
the  sea  and  earn  enormous  profits  for  its  owners.  Naturally 
the  British  owner  thought  that  Franca  should  have  requisitioned 
and  controlled  her  own  shipping  before  taking  advantage  of 
England's  shipping."  The  explanation  of  this  situation  by  M. 
de  Monzie  in  the  French  Chamber  is  naive  in  the  extreme,  for  he 
said: 

This  portion  of  the  free  tonnage  was  employed  usefully 
and  used  for  the  national  good  by  its  managers,  who  have 
experience  in  the  management  of  the  ships  confided  to  them. 
He  could  not  be  expected  without  any  organization,  with- 
out cooperation,  "  without  a  staff,  without  commercial  ex- 
perience, to  order  that  the  state  shall  suddenly,  brutally  seize 
these  4()5,000  tons,  especially  seeing  that,  by  the  decree  of 
July  17,  the  gov^ernment  has  the  right  to  exercise  the  per- 
manent control  on  every  voyage  and  the  power  to  refuse  a 
license."  ^ 

'  Fairplax,  September  3.  1917,  p.  462. 

■  Ibid..  September  9,  1917. 

^  Ibid.,  October  11,  1917,  p.  595. 


182  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

To  whicli  the  natural  British  reply  was  that  if  the  French  Gov- 
ernment was  unable  to  manage  465,000  tons  of  their  own  ship- 
ping, what  could  they  do  with  2,000,000  tons  of  British  shipping. 
A  crisis  seems  to  have  been  brought  about  by  the  amazing  and 
almost  unbelievable  episode  of  a  IVench  ship  carrying  to  a  French 
port  a  full  cargo  of  rhododendrons,  to  which  M.  de  Monzie  in 
his  Chamber  report,  July  30,  1U17,  made  full  confession. 

For  example,  one  day,  in  one  of  the  important  French 
ports,  at  a  time  when  the  dearth  of  ships  was  great,  and 
anxiety  was  multiplied  by  reason  of  certain  torpedoings,  one 
saw  arriving  a  surprising  ship,  which  carried  a  full  cargo  of 
rhododendrons  at  a  time  when  steel  was  so  necessary.  And 
if  we  did  not  know  of  the  fact,  the  Fnglish  Admiralty  did, 
and  protested  with  energy  that  measures  had  not  been  taken 
to  prevent  such  abuse.  ^ 

As  a  matter  of  fact,  this  freedom  of  certain  French  ships  to 
continue  to  take  the  toll  of  free  rates  continued  for  some  months, 
and  prevailed  for  a  part  of  the  Italian  shipping  even  down  to 
1918,  at  the  same  time  that  England  was  gallantly  placing  her 
ships  at  the  disposal  of  Italy  at  a  low  rate. 

In  the  spring  of  191G,"  Italy  sent  a  special  commission  to 
Britain,  which  resulted  in  the  British  Government  placing  70 
steamers,  of  5,000  tons  dead-weight  each,  at  the  disposal  of  the 
Italian  Government  to  bring  350,000  tons  of  grain  to  Italy  at  the 
same  freight  England  was  paying  to  requisitioned  steamers.  She 
also  gave  sufficient  tonnage  to  carry  50,000  tons  monthly  of  coal 
from  Cardiff  for  the  Italian  state  railways  for  the  duration  of 
the  war,  and  eighteen  months  later  some  Italian  ships  were  still 
fattening  their  owners'  pockets  with  the  outrageous  earnings  of 
the  full  market  rate. 

Interallied  Chartering 

After  the  English,  French  and  Italian  Governments  had  to 
supplement  their  own  supplies  of  shipping  by  chartering  neutral 

^  Fairplav,  September  13,  1917,  p.  462. 
'  Ibid.,  May  4,  1916. 


BRITISH    CONTROL    AND    OPERATION    OF    SHIPPING  183 

shipping,  it  became  early  evident  that  the  competition  of  one  with 
the  other  tended  to  force  up  rates  more  than  would  be  the  case 
if  they  had  a  single  chartering  board,  which  was  accordingly 
created  under  the  title  of  the  Interallied  Chartering  Committee 
and  which  has  been  at  work  for  many  months.  A  similar  attempt 
to  conduct  interallied  ship  purchases  through  a  common  board  was 
not  so  successful,  according  to  the  admission  of  an  under-secre- 
tary  in  the  British  Parliament. 

On  English  initiative  the  Allies  agreed  that,  as  we  had  a 
common  policy  for  chartering,  it  was  necessary  to  have  a 
common  policy  for  purchasing.  The  ships  of  all  the  world 
were  to  be  placed  on  the  table,  and  to  be  divided  in  friendly 
agreement.  It  was  agreed  that  each  country — France, 
Italy  and  England — which  was  represented  on  the  purchas- 
ing committee  could  only  buy  a  ship  after  it  has  been 
authorized  to  do  so  by  the  international  committee.  The 
result  was  that  when  a  manufacturer  or  a  shipowner  desired 
to  purchase  a  Norwegian  or  a  Greek  ship,  he  sent  in  a  re- 
quest to  the  Ministry,  declaring  that  he  had  an  option,  or 
that  he  is  negotiating  for  the  purchase  of  the  vessel.  The 
government  talks  over  the  proposition,  and  transmits  it 
through  its  representatives  on  the  interallied  committee  in 
London.  The  representatives  of  the  three  countries  then 
discuss  whether  the  ship  shall  be  placed  among  those  allotted 
to  France,  England  or  Italy. 

]\I.  Gratien  Candace :  Meanwhile  a  neutral  buys  the  ship. 

Under-Secretary  of  State:  I  agree  that  in  practice  the 
system  has  been  very  disappointing.  ...  In  truth,  I  re- 
peat the  system  of  the  purchasing  committee  has  been  the 
source  of  numerous  disagreeable  experiences.^ 

As  the  result  of  his  experience  with  the  law^  of  supply  and  demand 
when  supply  had  ceased  to  be  able  to  meet  demand,  the  under- 
secretary made  the  following  interesting  lament: 

If  it  is  not  for  want  of  money,  why  have  not  purchases 
been  more  numerous?  In  truth,  it  must  be  stated,  without 
any  desire  to  extract  therefrom  any  exposition  of  principle, 

'  Fairplay,  September  13,  1917,  p.  462. 


184  INFLUENCE    OF    THE    GREAT    WAR    UPOX    SHIPPING 

free  competition  is  an  excellent  system  in  time  of  peace,  but 
impracticable  in  time  of  war.  whatever  attraction  there  may 
be  for  certain  state  ownership  formulas,  it  is  not  possible  to 
allow  complete  freedom  in  this  matter.  Complete  freedom 
is  bad  in  other  things,  but  it  is  especially  bad  in  the  question 
of  chartering  and  purchasing  ships. 

International  Control  of  Ships 

The  continued  delays  of  ships  in  port,  such  as  a  vessel  requir- 
ing a  month  to  unload  at  a  French  port  in  the  spring  of  1017.^ 
showed  the  Allies  the  necessity  of  absolute  planning  of  all  ship 
work  by  some  comprehensive  body,  and  therefore  of  absolute 
consolidation  of  its  control.  It  was  iiut  natural  that  within  a 
year  after  the  establishment  of  unified  control  of  British  shipping 
under  the  Shipping  Controller,  there  should  follow  the  natural 
next  step :  namely,  an  international  organization  to  coordinate 
the  transport  facilities  of  all  the  .Mlies,  such  as  was  planned  by 
the  Interallied  Conference  at  Paris,  December,  1017.  A  com- 
mittee was  formed  with  American  representatives,  and  a  British 
member  resident  in  Xew  York.  (See  Chapter  \TI.)  This  body 
is  able  to  order  any  Allied  steamer  by  wireless  to  any  port  which 
their  knowledge  of  conditions  makes  it  most  desirable  that  it 
should  reach,  even  to  the  extent  of  changing  the  routing  of  the 
vessel  while  at  sea. 

Similar  attempts  at  simplification  of  the  coal  transport  trade 
(see  Chapter  IV)  and  the  wool  transport  ■  were  doubtless  of 
value  in  helping  the  railroads  keep  the  ports  clear. 

The  problem  of  port  congestion  has  largely  disappeared  but  in 
this  connection  the  increasing  ship  famine  and  freight  famine 
should  not  be  overlooked. 

It  is  to  be  hoped  that  this  national  and  international  unification 
of  control  may  bring  about  that  desired  condition  where  vessels 
load  promptly,  sail  promptly  and  then  immediately  proceed  on 
their  next  assignment. 

•  Fa;>/)/ov,  Alarch  15,  1917. 

■  A  committee  created  by  order  of  the  Army  Council  was  established  with 
headquarters  at  Bradford  to  approve  of  wool  shipments  so  they  would  pro- 
vide better  shipping  and  most  direct  routes. 


CHAPTER  VII 

Control  and  Operation  of  Shipping  by  the  United  States 
Government,  1914-1918 

Similarity  of  English  and  American  Experience 

Like  causes  tend  to  produce  like  results.  It  is  for  this  natural 
reason  that  we  in  the  United  States  have  duplicated  England's 
experiences  with  ship  operation  in  all  important  respects,  but 
with  great  ditference  in  detail  resulting  from  the  different  ways 
in  which  the  problem  unfolded  itself  in  the  two  countries.  While 
England  was  having  two  and  a  half  years  of  war  with  ever  in- 
creasing pressure,  we  were  having  a  period  of  profitable  neutral- 
ity, during  which  the  American  nation — farmer,  manufacturer, 
exporter,  financier,  and  shipowner  alike — fattened  his  purse  at 
the  expense  of  England,  France,  Russia  and  Italy.  Then  we 
entered  the  war,  and  within  less  than  a  year  a  swift  series  of 
increases  in  governmental  authority  left  American  shipping 
bound,  controlled,  to  all  intents  and  purposes  drafted,  an  arm  of 
the  government,  as  was  the  case  with  British  shipping. 

Along  with  this  increase  in  authority  went  the  rapid  realiza- 
tion of  inefficiency  of  operation,  accompanied  by  the  persistent, 
almost  pathetic,  pleadings  of  Europe  for  help,  for  ships,  ships, 
more  ships.  These  calls,  driven  home  by  the  spectacle  of  block- 
ades and  partial  paralysis  of  our  own  industry  because  of  trans- 
port congestion,  led  to  rapid  developments  in  organization  and 
more  organization  in  the  struggle  to  add  efficiency  unto  author- 
ity. We  probably  had  no  reason  to  expect  it  to  be  otherwise, 
but  it  is  none  the  less  an  unpleasant  reflection  that  during  this 
three  and  one-half  years  the  American  democracy  showed  in  its 
development  of  shipping  policy  no  sign  of  having  learned  by 
observation  when  the  object  lesson  was  so  near  and  so  well 
known  as  the  English  experience.     Certain  conditions  produced 

185 


ISG  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

certain  results  in  England,  and  all  we  learned  from  it  was  to 
recognize  the  resulting  symptoms  somewhat  more  promptly 
when  we  in  our  turn  had  the  causative  trouble  and  had  the  facts 
repeatedly  pointed  out  from  Europe.  The  slowness  of  our  wak- 
ing up  serves  as  an  added  reason  why  the  educated  imperialism 
of  Germany  must  be  suppressed,  for  it  is  plain  that  society  based 
upon  individualistic  profiteering  industry  has  no  chance  to  sur- 
vive in  the  presence  of  scientific  imperialism  organized  for  con- 
quest. 

United  States  a  Bystander  in  the  Shipping  World 

UNTIL  1917 

During  the  first  two  and  a  half  years  of  the  war  the  United 
States  Government,  as  for  decades  past,  played  the  part  of  the 
bystander  in  the  world  of  shipping.  It  is  true  that  the  Ameri- 
can shipyards,  individualistic  enterprises  all.  were  busy  building 
ships  partly  for  American,  but  chiefly  for  foreign  owners,  but 
the  attitude  of  the  nation  and  the  actual  achievement  of  the  gov- 
ernment was,  as  aforesaid,  chiefly  that  of  a  bystander.  We  had 
been  able  to  do  this  in  times  past  in  peace,  for  the  simple  reason 
that  in  the  conduct  of  our  economic  life  we  did  not  need  to  build, 
own.  or  operate  ships.  Have  we  not.  every  month  of  our  lives, 
heard  the  true  boast  about  the  great  variety  and  completeness  of 
American  resources  and  industries?  We  all  knew  we  could  live 
comfortably  on  the  products  of  our  complete  round  of  natural 
resources.  We  did  not  need  foreign  trade!  (At  least  we  did  not 
need  it  much.)  Therefore,  we  did  not  need  to  provide  for  it! 
The  chief  trend  of  our  trade  legislation  has  been  to  build  up 
tariffs  to  prohibit  imports  which  flow  to  us  because  the  world 
had  to  have  the  rich  products  of  our  monopoly  supplies  of 
cotton,  oil.  copper,  lumber,  grain,  meats,  tobacco  and  patented 
machinery,  which  have  made  up  the  great  bulk  of  our  exports. 
European  nations  built  their  ships  and  came  to  our  shores 
for  these  goods,  and  when  war  came  our  monopoly  position 
was  strengthened  because  of  our  great  ability  to  make  munitions. 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       187 

The  Allied  ships  came  for  munitions  also,  so  that  still  we 
did  not  seriously  need  ships,  and  never  having  had  any,  we 
knew,  nationally  speaking,  little  about  them.  This  is  well 
proved  by  examination  of  the  part  the  shipping  question  played 
in  the  life  of  Washington  during  the  first  two  years  of  the 
war,  when  Congress  spent  much  time  exposing  our  general 
national  ignorance  of  shipping  questions. 

IV e  Admit  Foreign  Ships  to  Registry 

As  a  bystander,  we  hastened  to  gather  up  the  wreckage  of  the 
battle.  With  surprising  alacrity  Congress  threw  open  the  door 
to  foreign  shipping  by  passing  a  new  ship  registration  act  within 
less  than  three  weeks  after  the  war  started  (August  18,  1914). 
For  the  first  time  in  decades  the  foreign  built  ship  was  permitted 
to  register  under  the  ^American  flag.  In  the  next  ten  and  a  half 
months,  namely,  to  July  1,  1915,  we  received  148  vessels  ^  of 
523,301  gross  tons,  but  foreign  prohibitions  of  transfer  of  ves- 
sels to  other  nationalities  reduced  this  amount  to  a  small  figure 
the  next  year.  It  should  be  stated,  however,  that  about  nine- 
tenths  of  the  vessels  that  came  to  us  represented  no  change  of 
investment,  merely  the  transfer  of  American  owned  vessels " 
from  the  foreign  flags  under  which  they  had  been  running  more 
economically  to  the  American  flag  under  which  they  were  com- 
pelled to  run  more  expensively,  but,  owing  to  the  troubles  of  the 
war,  with  greater  safety  and  profit. 


'  Of  these,  96  of  332,258  gross  tons,  were  formerly  under  the  British 


30    • 

•  147,742      " 

5   ' 

•     17.401       •' 

6    ' 

'     10,549      " 

5    ' 

•      5.452      " 

1    ' 

'      5,275      "        " 

1    ' 

'      1,352      " 

1    ' 

•       1,381       " 

2    ' 

•       1.349      " 

flag 


German 
Cuban  " 

Belgian  " 

Mexican  " 

Rumanian  " 
Uruguayan  " 
Chilean  " 

Norwegian    " 
Neu!  International  Year  Book,  1915,  p.  589. 

'  The  Standard  Oil  Co.  of  New  Jersey  owned  25  of  130,322  gross  tons;  the 
United  Fruit  Company.  24  of  113,243  gross  tons;  and  the  United  States 
Steel  Products  Co.,  10  of  48,271  gross  tons;  and  44  individuals  or  corporations 
owned  each  a  single  ship.    New  International  Year  Book,  1915,  p.  589. 


188  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

The  La  Follcttc  Seamen's  Bill 

Despite  the  war,  the  American  Congress  passed  the  La  Follctte 
Seamen's  Act,  March  4,  1015,  which  went  into  effect  for  Ameri- 
can vessels  November  4  of  that  year,  and  for  foreign  vessels  in 
American  trade,  March  4,  I'JlO.  This  was  generally  considered 
to  Ije  in  favor  of  the  Seamen's  Union  rather  than  of  shipping  or 
export  trade.  It  made  desertion  a  less  serious  offense,  it  pro- 
vided that  the  crew  should  be  paid  half  their  wages  at  every 
port,  thus  making  desertion  much  easier.  American  shipowners 
Hatly  declared  they  could  not  run  vessels  under  this  act  and 
several  American  lines  sold  their  ships  to  foreign  owners.  The 
most  conspicuous  of  these  was  the  Pacific  Mail  Company,  which 
since  1848  had  been  an  important  factor  of  transpacific  trade, 
and  which  now  sold  to  Japan  the  fastest  steamers  crossing  the 
Pacific — the  IS-knot.  11,000-ton  boats  Siberia  and  Korea. 
Altogether  the  losses  by  sale  of  American  vessels  for  IJJ 15-10 
(102,479  tons)  were  greater  than  our  gains  by  transfer  from 
other  flags  (83,480). 

President  Wilson's  Shipping  Bills,  1915-1917 

During  the  winters  of  1914-15  and  1915-10,  the  general  ques- 
tion of  the  world's  ship  supply  was  forcing  itself  upon  the  atten- 
tion of  every  nation  with  any  overseas  trade.  By  January,  1915. 
rates  had  reached  the  highest  point  ever  known.  The  disappear- 
ance of  the  German  liners  from  the  sea  and  the  steady  requisi- 
tioning of  British  vessels  was  causing  us  to  appreciate  as  never 
before  the  fact  that  we  had  but  few  ships.  The  Wilson  admin- 
istration brought  forward  a  bill  aiming  to  relieve  the  situation 
by  providing  $25,000,000  to  build  or  purchase  ships  to  be  owned 
by  the  United  States  Government.  This  precipitated  a  long  and 
acrimonious  debate  in  Congress  and  in  the  press.  It  had  as  its 
intellectual  background  the  general  impression  that  America  had 
few  ships,  that  the  carrying  of  her  trade  was  in  the  hands  of 
the  foreigners,  that  the  foreigners  had  formed  themselves  into 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       189 

trusts  who  did  as  they  pleased  with  American  trade,  and  that  we 
were  being  gouged  by  these  foreign  trusts.  This  feeling  was  some- 
what increased  by  the  knowledge  that  England  w^as  getting  her 
own  service  from  her  ships  at  the  low-  Blue  Book  rates  while 
unrequisitioned  English  ships  were  charging  us  the  highest  rates 
ever  known.  Our  sense  of  independence  was  offended.  Mean- 
w^hile  there  stood  the  Interstate  Commerce  Commission  as  a 
model  in  most  American  minds  of  the  way  in  which  a  transport 
monopoly  might  be  curbed.  Why  not  curb  the  shipping  mo- 
nopoly as  we  had  curbed  the  railroad  monopoly,  by  act  of  Con- 
gress ?  The  necessity  of  doing  something  was  generally  admitted, 
but  the  Democratic  bill  providing  for  a  Shipping  Board  and  a 
$25,OUU,000  fund  for  ship  purchase  and  possibly  building  and 
certainly  government  ownership  was  opposed  by  nearly  all  of 
us,  and  it  was  defeated  despite  the  pressure  of  a  strong  Adminis- 
tration intrenched  by  a  big  congressional  majority  backed  up  by 
strong  party  discipline.  The  Republicans  called  it  a  plain  sub- 
terfuge that  the  Democrats,  having  put  themselves  on  record  as 
opposed  to  subsidy,  and  realizing  that  they  were  wrong  and  that 
we  had  to  have  something  of  the  sort,  were  doing  worse,  to  save 
their  faces,  by  making  it  government  ownership.  Government 
ownership  beyond  a  doubt  is,  or  in  1915  certainly  was,  one  of  the 
greatest  ogres  that  could  be  called  to  the  attention  of  the  business 
interests  of  America.  We  distrusted  it — we  distrusted  its  wis- 
dom,^ wc  distrusted  its  efficiency,  we  distrusted  its  disinterested- 

'  "  It  seems  to  us  that  the  most  superficial  study  of  the  actual  situation 
with  regard  to  ocean  tonnage,  present  and  prospective,  must  make  it  clear 
to  any  thinking  person  that  the  Administration's  shipping  measure,  even  if 
promptly  enacted  bv  law  of  Congress,  could  not  be  counted  upon  to  afford  the 
country's  commerce  any  appreciable  relief  with  respect  either  to  available 
ocean  carriers,  or  to  ocean  freight  rates  during  the  period  of  real  stress.   .    .    . 

Just  as  today  nothing  is  so  profitable  as  a  ship,  so  within  a  short  time 
after  the  coming  of  peace,  nothing  will  be  so  unprofitable  as  a  ship."  Edito- 
rial in  The  Eccnomic  World.  January  29,  1916,  p.  138. 

Similar  opinion  from  high  sources  freely  crossed  the  Atlantic:  witness 
editorial  comment  from  the  great  and  conservative,  but  individualistic,  Lloyd's 
Weekly.  October  22,  1^15  : 

"  In  other  words,  the  United  States  is  going  to  set  up  a  system  whereby 
certain    people   must    be    invited    to    speculate    in    shipping   with    government 

The  United  States  Government,  it  is  stated  by  Mr.  McAdoo,  '  will  control 
routes  and  rates.'  It  may  attempt  it.  but  how  will  it  stand  up  against  the 
competition   of   the   independent   shipowner,   whether   American   or    foreign? 


190  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

ness.  We  feared  it  as  a  tool  for  political  favoritism  and  it  was 
opposed  anyway  to  the  essential  genius  of  our  individualistic 
democracy.  American  business  was  opposed  to  it  through  and 
through.  For  example,  the  United  States  Chaml^er  of  Commerce, 
a  very  representative  body  with  widely  scattered  membership, 
took  a  questionnaire  vote  that  showed  the  great  opposition. 

Proposition  T.  Do  you  favor  the  government  undertaking 
the  purchase,  construction,  or  charter  of  vessels  for  mer- 
cantile purposes,  together  with  the  operation  of  such  ves- 
sels?   In  favor,  82;  opposed,  G98. 

Proposition  II.  Do  you  favor  ownership  of  merchant  ves- 
sels by  the  government,  but  with  operation  by  private 
parties  under  leases?     In  favor,  54;  opposed,  711. 

Proposition  III.  Do  you  favor  subsidies  from  the  govern- 
ment sufficient  to  offset  the  difference  in  cost  between 
operation  of  vessels  under  the  American  flag  and  opera- 
tion in  the  same  deep  sea  trades  under  foreign  flags? 
In  favor,  558;  opposed,  186. 

Proposition  IV.  Do  you  favor  subventions  from  the  gov- 
ernment to  establish  regular  mail  and  freight  lines  under 
the  American  flag  to  countries  in  which  the  commercial 
interests  of  the  United  States  are  important,  and  to 
American  dependencies?    In  favor,  718;  opposed,  48.^ 

The  public  discussion  of  the  bill  generally  centered  around 
the  idea  of  government  purchase  of  ships,  but  the  sum  provided 
would  not  have  gone  far  and  the  prices  would  have  been  en- 
hanced by  the  appearance  of  this  strong  purchaser  in  the  ship 
market.  A  proposition  of  Mr.  McAdoo,  Secretary  of  the  Treas- 
ury, that  the  government  build  500,000  tons  of  shipping,  received 

The  private  merchant  ship  will,  of  course,  let  the  state  merchant  ship  have 
any  unprofitable  trade  that  is  going,  but  no  more.     It  will  be  interesting  to 
see  how  this  curious  plan  of  hitching  a  merchant  marine  on  to  the  American 
Navy  works  out  in  practice,  if  it  ever  gets  the  chance." 
'  Marine  Review,  August,  1915,  p.  281. 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       191 

scant  attention,  despite  its  wisdom  and  direct  bearing  on  the  real 
need,  which  was  to  create  ships. 

The  bill  was  lost.  We  were  in  a  position  that  only  govern- 
ment action  could  help,  and  we  overwhelmingly  refused  to  give 
government  the  power.  But  meanwhile  ships  continued  to  sink. 
The  British  continued  to  call  their  vessels  home,  even  American 
owned  vessels  sailing  from  New  York  to  South  America.  The 
ship  famine  increased,  and  rates  rose  to  unimagined  heights.  In 
his  December,  1915,  message.  President  Wilson  again  recom- 
mended government  owned  vessels  as  a  means  of  "  restoring 
our  commercial  independence  on  the  seas."  A  couple  of  months 
later  the  Administration  presented  a  bill  much  like  its  predeces- 
sor, except  that  it  provided  $50,000,000  instead  of  $25,000,- 
000.  to  build  or  purchase  ships  and  combined  with  it  the  Inter- 
state Commerce  Commission  idea  of  control.  The  bill  carried 
specific  and  drastic  provisions  for  the  control  of  rates  and  traffic, 
such  as  the  elimination  of  rebates,  and  fighting  ships,  the  filing 
of  all  rates  and  agreements,  and  governmental  power  to  can- 
cel the  same;  power  to  enforce  maximum  rates,  thus  preventmg 
some  of  the  extremes  of  competition;  and  power  to  prevent  dis- 
crimination between  persons  and  places.  On  its  other  side  it 
was  to  issue  bonds  necessary  for  the  $50,000,000  with  which 
to  purchase  or  build  cargo  ships  and  set  them  to  work  carrying 
American  merchandise  across  the  seas.  If  private  owners  would 
not  come  forward  to  charter  these  vessels,  the  Shipping  Board 
was,  as  a  last  resort,  to  create  a  corporation  to  do  the  business 
itself,  keeping  control  of  at  least  51  per  cent  of  the  stock  and 
thus  becoming  a  carrier  on  the  high  seas. 

Another  long  and  bitter  discussion  followed,  for  we  now  had 
added  to  the  ogre  of  government  operation  that  other  ogre  of 
extensive  government  control,  and  this  time  it  was  control  of 
the  private  carrier  l)y  the  Shipping  Board,  which  might  also  be 
his  business  rival.  The  bill  was  presented  in  January  and  passed 
in  September.  1917,  after  being  amended  in  May  to  provide 
that  the  Shipping  Board  should  disband  its  business  corporation 
five  years  after  the  war,  sell  or  charter  its  ships  to  American  citi- 


192  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

zens.  and  sell  its  other  property  to  the  best  advantage.  The 
political  character  of  the  board  was  partly  eliminated  by  remov- 
ing from  its  personnel  two  of  the  Cabinet  ofificers  as  provided  in 
the  first  draft. 

The  Shipping  Board 

President  Wilson  was  at  this  time  carrying  out  the  policy  of 
negotiation  and  nonpreparation.  Perhaps  that  is  the  reason  he 
delayed  the  appointment  of  this  Shipping  Board  '  three  and  a 
half  months  after  its  authorization,  until  December  •22.  We 
had  other  months  of  delay  before  it  became  very  active.  Thus, 
although  the  bill  gave  extensive  control  of  ocean  freight  rates 
and  traffic,  the  President  tried  to  obtain  that  result  by  exhorta- 
tion at  as  late  a  date  as  July  11,  11)17.  Witness  the  following 
remarkable  statement  from  his  published  message  of  that  date 
to  the  business  men  of  the  country  : 

Let  me  turn  for  a  moment  to  the  shipowners  of  the 
United  States  and  the  other  ocean  carriers  whose  example 
■  they  have  followed,  and  ask  them  if  they  realize  what 
obstacles,  what  almost  insuperable  obstacles,  they  have  been 
putting  in  the  way  of  the  successful  prosecution  of  this  war 
by  the  ocean  freight  rates  they  have  been  exacting.  They 
are  doing  everything  that  high  freight  charges  can  do  to 
make  the  war  a  failure,  to  make  it  impossible.  .  .  .  The  fact 
is  that  those  who  have  fixed  war  freight  rates  have  taken 
the  most  effective  means  in  their  power  to  defeat  the  armies 
engaged  against  Germany.  When  they  realize  this  we  may 
— I  take  it  for  granted — count  upon  them  to  reconsider  the 
whole  matter. 

This  may  have  been  needed  for  its  influence  on  public  opinion, 
but  it  is  difficult  to  take  it  as  a  serious  attempt  to  control  rates. 
It  came  two  years  and  seven  months  after  England  had  set  the 
rate  for  her  own  shipping,  years  after  we  had  set  the  rate  on 
railway  carriage,  and  three  months  before  our  Shipping  Board 

^  See  Chapter  X  for  an  account  of  the  Shipping  Board. 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       193 

used  the  powers  it  had  then  had  for  a  year— and  set  the  rate  on 
American  shipping. 

After  four  and  a  half  months  of  uninterrupted  submarine 
sinking,  and  two  and  a  half  months  of  war,  our  Shipping  Board 
finally  became  active.  Congress  passed  an  emergency  act  of  June 
15,  1917,  giving  it  additional  powers  and  increasing  its  funds  to 
$500,000,000,  after  which  the  government  began  in  earnest  the 
work  on  the  two  policies  of  encouraging  shipbuilding  (see  Chap- 
ter X)  and  shipping  control. 

Increasing  Shipping  Facilities 

{a)  Building  of  ships  by  the  government.  In  addition  to 
starting  shipyards  of  its  own,  the  government  let  a  number 
of  contracts  to  private  shipbuilders,  but  this  policy  promised 
little  actual  increase,  for  the  reason  that  the  yards  were  booked 
ahead  with  foreign  orders  to  such  an  extent  that  it  was  said 
2,000,000  tons  were  under  way  or  under  contract  for  foreign 
owners.  All  of  this  the  Shipping  Board  requisitioned  August  3, 
taking  not  only  the  ships  that  were  under  way,  but  even  those  for 
which  the  keels  had  not  been  laid,  but  for  which  some  materials 
had  been  gathered. 

(b)  The  admission  of  foreign  vessels  to  American  coasting 
trade  by  an  act  of  Congress  the  middle  of  September  was  a 
distinct  though  needlessly  belated  aid.  The  attractions  of  the 
transatlantic  business  had  taken  vessels  from  our  coasting  trade 
at  such  a  rate  that  as  early  as  February  24,  191G,  the  English 
shipping  journal  Fairplay  reported  that  80  per  cent  of  the  ves- 
sels engaged  in  American  coasting  trade  had  left  their  accustomed 
routes  for  transoceanic  service.  The  traffic  thus  thrown  back 
upon  the  railroads  of  the  United  States  helped  to  increase  the 
congestion  of  their  tracks  and  terminals. 

{c)  Commandeering  of  neutral  vessels.  Following  the  ex- 
ample of  Great  Britain,  our  government  has  virtually  com- 
mandeered neutral  shipping  through  the  bunker  privileges. 
Without  coal  a  ship  is  helpless.     She  could  get  coal  only  by 


194  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

promisinj^  to  return  to  the  United  States — a  "  voluntary  agree- 
ment," as  a  representative  of  the  Shippin^^  Board  called  it.  with 
a  perfectly  straight  face.  By  this  means  many  a  neutral  vessel 
has  been  tied  down  to  a  definite  route  and  a  definite  rate  in  the 
service  of  the  Allies.  In  the  case  of  the  Dutch  vessels  we  had  to 
act  more  formally.  On  March  18  the  United  States  joined  the 
other  Allies  in  commandeering  about  1.000,000  tons  of  Dutch 
shipping  which  lay  within  their  territorial  waters.  This  was  the 
final  conclusion  of  long  negotiations  in  which  it  was  claimed  that 
the  Dutch  would  have  l)een  glad  to  give  us  by  voluntary  agree- 
ment what  we  were  finally  compelled  to  take,  but  that  they 
dared  not  do  so  because  of  the  menace  of  German  reprisal. 
Speaking  of  this  operation.  President  Wilson  in  his  proclamation 
cf  March  21.  1918.  said: 

Meanwhile.  German  threats  have  grown  more  violent,  with 
a  view  to  preventing  any  permanent  agreement  and  of  forc- 
ing Holland  to  violate  any  temporary  agreement.  ...  I  pro- 
foundly sympathize  with  the  difficulty  of  Holland's  posi- 
tion under  the  menace  of  a  military  power  which  has  in 
every  way  demonstrated  its  disdain  of  neutral  rights.  But, 
since  coercion  does  in  fact  exist,  no  alternative  is  left  to  us 
but  to  accomplish,  through  the  exercise  of  our  indisputable 
rights  as  a  sovereign,  that  which  is  so  reasonable  that,  in 
other  circumstances,  we  could  be  confident  of  accomplishing 
it  by  agreement.^ 

The  element  of  bargain  was  furnished  by  the  fact  that  we 
made  sacrifices  by  granting  Holland  a  liberal  supply  of  food, 
100,000  tons  of  grain.  We  left  her  enough  shipping  to  supply 
her  local  needs,  paid  liberal  charter  rates  for  the  vessels  we  took, 
promised  to  return  them  at  the  end  of  the  war  or  sooner, 
promised  to  pay  for  them  if  lost  by  the  risk  of  war.  or  if  the 
owner  chose  to  wait  for  another  vessel,  it  would  be  delivered  as 
soon  as  possible.  ^leanwhile  he  would  receive  interest  on  his 
money.  The  crews  were  sent  home  in  a  Dutch  vessel,  staying 
in  the  intervening  period  at  the  expense  of  the  American  nation. 

'  Philadelphia  Bulletin,  Alarch  21,  1918. 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       195 

After  being  taken,  the  Dutch  ships  were  manned  by  United 
States  Naval  Reserves.  It  was  planned  to  use  them  as  much  as 
possible  outside  the  war  zone. 

Increasing  the  Supply  of  Sailors 

In  anticipation  of  the  need  for  increased  crews  to  man  the 
new  ships  the  Emergency  Fleet  Corporation  established  a  Re- 
cruiting Service  on  June  1,  1917.  Henry  Howard  of  the  Custom 
House,  Boston,  who  had  brought  the  matter  to  the  attention  of 
the  Emergency  Fleet  Corporation,  was  appointed  director.^  The 
recruiting  service  involves  the  training  of  the  personnel  for  all 
services  in  the  merchant  marine;  that  is,  deck  officers,  engineer 
officers,  sailors,  cooks,  stewards,  oilers,  water  tenders,  firemen, 
etc.  For  this  work  two  types  of  schools  were  established,  one 
for  deck  and  engineer  officers  and  the  other  for  apprentice 
seamen. 

Schools  for  Deck  and  Engineer  OMcers 

The  assistance  of  the  Massachusetts  Institute  of  Technology 
was  secured  in  taking  charge  of  the  teaching  in  both  the  en- 
gineering and  navigation  courses.  Dean  Burton  of  that  school 
was  formerly  connected  with  the  Coast  and  Geodetic  Survey 
and  was  an  expert  navigator.  He  organized  and  trained  the 
navigation  teachers.  Professor  Miller  of  the  Steam  Engineer- 
ing department  of  the  Massachusetts  Institute  of  Technology, 
in  like  manner,  took  charge  of  the  engineering  courses.  The 
country  was  divided  into  seven  sections,  corresponding  as  closely 
as  possible  to  the  sections  employed  by  the  Steamboat  Inspec- 
tion Service.  In  each  of  the  sections,  one  or  more  schools  were 
established.     They  are  as  follows : 

Section  1.  Extends  from  Eastport  to  the  Connecticut  River. 
Navigation   schools   at   Cambridge,    Mass.,   Gloucester,    Mass., 

'  Mr.  Howard  prior  to  his  appointment  was  Vice  President  of  the  Merri- 
mac  Chemical  Company.  He  had  had  considerable  experience  on  the  sea 
as  an  amateur,  having  been  a  yachtsman  since  the  age  of  12.  He  had  studied 
navigation  and  had  had  about  twenty  years  of  experience  on  ocean-going 
steamships. 


lOG  IXFLUENXF.    OF    THE    GREAT    WAR    ll'ON     SHIi'I'ING 

Portland.  Maine.  Rockland.  Maine.  Providence.  R.  I.  En<ji- 
neering  school,  Mass.  Institute  of  TechnologA-.  Boston. 

Section  2.  Extends  from  the  Connecticut  River  to  Cape 
Charles  by  Norfolk.  Navigation  schools.  Baltimore.  Newport 
News,  two  in  New  York.  Norfolk.  \'a..  Philadelphia  and  Atlantic 
City.  Engineering  schools.  Stevens  Institute,  Hoboken,  N.  J., 
Johns  Hopkins  University,  Baltimore.  Md. 

Section  '.\.  Extends  from  Cape  Charles  to  Cape  Florida.  One 
navigation  school  at  Jacksonville,  Fla. 

Section  4.  Includes  Gulf  Seaboard  from  Cape  Florida  to  Rio 
Grande.  Navigation  schools,  Galveston.  Mobile.  New  Orleans. 
Engineering  school.  Tulane  University  at  New  Orleans. 

Section  ').  Includes  California  Coast.  Navigation  schools.  Los 
Angeles.  San  Diego,  San  Francisco,  Eureka. 

Section  (I.  Includes  Washington.  Oregon  Seaboard.  Naviga- 
tion schools,  Bellingham.  Wash.,  I'ortland,  Ore.,  Tacoma.  Wash. 
Engineering  school.  University  of  Washington.  Seattle. 

Section  7.  Includes  the  Great  Lakes.  Navigation  schools  at 
Buffalo,  Chicago.  Cleveland  and  Detroit.  Engineering  schools. 
Armour  Institute.  Chicago.  Chase  School  of  .Applied  Science. 
Cleveland. 


At  the  head  of  each  of  these  sections  has  been  placed  a  busi- 
ness administrator  who  is  serving  at  a  salary  of  $5  per  month. 
These  men  are  not  necessarily  acquainted  with  the  technical 
points  of  training  for  officers  as  the  instruction  in  the  schools 
is  under  the  direct  supervision  of  Dean  Burton  and  Professor 
Miller,  both  of  the  Massachusetts  Institute  of  Technology. 

Men  between  the  ages  of  10  and  ')5  who  have  had  at  least 
two  years  experience  at  sea  are  admitted  to  the  schools.  .  No 
attempt  is  made  to  train  men  for  officers  who  have  not  had  the 
previous  two  years  sea  experience.  Candidates  must  be  citizens 
of  the  United  States.  At  the  end  of  a  period  of  training  of  from 
four  to  six  weeks,  they  are  required  to  take  the  usual  officers' 
examination  of  the  Steamboat  Inspection  Service.  If  exam- 
inations are  passed  successfully,  the  men  receive  appointments, 
as  vacancies  occur,  to  positions  on  ocean-going  steamers,  usually 
as  third  deck  officers  or  third  engineer  officers.  With  further 
experience  they  are  promoted  to  more  responsible  positions. 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       197 

On  March  2,  191S,  there  were  enrolled  in  the  schools  for 
deck  officers  634  students,  and  in  the  schools  for  engineer  officers, 
203  students.  Up  to  and  including  December  1.  1917,  1,516 
students  had  completed  the  course  of  training.  It  is  the  aim  of 
the  recruiting  service  only  to  meet  the  demand  for  officers  and 
not  to  overstock  the  market.  Accordingly,  in  the  fall  of  1917, 
when  the  supply  seemed  to  be  greater  than  the  demand,  the 
schools  were  not  advertised  and  the  number  of  students  de- 
clined. At  the  present  time,  however,  an  effort  is  being  made  to 
secure  additional  students  in  order  that  officers  may  be  trained 
for  the  new  vessels  being  turned  out  by  the  Shipping  Board. 
Student  officers  are  not  paid  while  in  training.  They  must  pro- 
vide their  own  board  and  lodging,  but  tuition  is  free. 

Sdiools  for  Apprentice  Seamen 

For  the  training  of  sailors,  firemen,  oilers,  water  tenders, 
cooks,  stewards,  etc.  two  training  ships,  the  Calvin  Austin  and 
the  Governor  Dingley,  accommodating  between  five  and  six 
hundred  sailors  each,  have  been  provided.  These  ships  are  to 
be  kept  at  sea  as  much  as  possible  while  training  is  going  on. 
Particular  attention  is  being  paid  to  the  handling  of  lifeboats. 
This  course  of  training  lasts  from  four  to  six  weeks.  The 
men  are  divided  up  into  groups  according  to  the  particular 
work  they  desire  to  follow:  that  is,  sailors,  firemen,  etc.  Over 
each  group  of  ten  an  experienced  able  seaman  is  placed  as  an 
instructor.  At  the  end  of  the  course  of  training  the  men  are 
placed  on  ocean-going  steamers  as  ordinary  seamen.  While  in 
training  they  are  paid  S30  a  month  and  board.  It  is  planned  at 
the  present  time  by  the  recruiting  service  to  secure  additional 
vessels  to  be  used  as  training  ships. 

Rearrangement  of  Shipping  Resources 

The  most  effective  utilization  of  the  shipping  creates  haras- 
sing problems,  for  there  are  two  calls  for  every  ship  and  we  must 
make  some  kind  of  a  choice.     For  instance,  in  October,  1917.  a 


1U8  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

conference  was  held  in  Washington  between  the  National  Coun- 
cil* of  American  Cotton  Manufacturers  and  representatives  of 
trade  and  transportation  in  the  attempt  to  speed  up  the  cotton 
movement.  Among  other  things  they  urged  upon  the  federal 
Shipping  Board  the  diversion  of  a  reasonable  percentage  of 
overseas  shipping  and  traffic  to  South  Atlantic  and  Gulf  ports, 
and  the  immediate  apportionment  of  a  maximum  amount  of  the 
available  coastwise  tonnage  for  the  transportation  of  cotton 
direct  to  New  England  ports.  The  conference  also  urged  greater 
density  and  uniform  size  of  cotton  bales  in  order  to  increase 
the  capacity  of  cars  and  ships. ^  In  May  the  Council  of  National 
Defense  had  urged  the  withdrawal  of  30.000  tons  of  coastwise 
shipping  for  carriage  to  Allied  governments. 

At  least  five  rearrangements  of  facilities  have  been  made. 

TJic  Raihvay  Congestion  Problem 
Inthe  attempt  to  relieve  railroad  congestion,  which  was  mak- 
ing port  congestion  and  interfering  with  shipping,  the  Shipping 
Board  announced  that  it  would  have  barges  built  to  assist 
in  the  movement  of  ore  and  coal  on  the  Ohio  and  Mississippi 
rivers.  This  came  a  week  after  an  appeal  to  the  Shipping  Board 
from  the  16th  Annual  Convention  of  the  Upper  Mississippi  Im- 
provement Association,  which  on  October  12  petitioned  the 
Shipping  Board  to  sell  or  lease  a  large  fleet  of  barges  to  en- 
able the  Mississippi  to  assist  in  war  work  by  carrying  ore.  This 
recommendation  was  made  in  the  light  of  successful  trips  of 
heavy  barges  carrying  ore  from  St.  Paul  to  St.  Louis,  and  coal 
back  to  St.  Paul. 

Government  Requisitions  all  Large  Ships  and  Controls  the 

Charter  Rate 

Late  in  September  the  Shipping  Board  announced  its  deci- 
sion to  requisition  all  ocean-going  merchant  vessels  above  2,500 
tons  dead-weight  capacity  and,  following  the  example  of 
Great  Britain  with  her  Blue  Book  rates,  set  a  base  rate.     The 

'  See  47th  annual  report,  New  Orleans  Cotton  Exchange. 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       199 

American  rate  differed  from  that  of  England,  however,  in  be- 
ing a  very  kicrative  one  and  also  in  being  somewhat  below  the 
market  in  which  it  was  made.  The  base  rate  was  $5.75  per  ton 
for -cargo  vessels  of  over  10,000  tons  dead-weight  going  up  to 
$7  a  ton  for  2,500  to  3,000  ton  boats;  passenger  ships  with 
greater  speed  received  higher  rates  going  up  to  $10.50  a  ton 
for  boats  of  more  than  15  knots.  It  was  also  planned  that  the 
War  and  Navy  Departments,  which  had  been  commandeering 
ships  for  their  own  use  at  varying  rates,  would  now  get  their 
vessels  from  the  Shipping  Board  which  would  do  all  the  re- 
quisitioning needed  by  the  government.  Naturally  shipowners 
felt  aggrieved  at  the  loss  of  profits  made  by  the  reduction  of 
rates,  and  there  was  many  a  protest.  A  shipowner  with  profane 
indignation  declared  he  would  never  let  the  United  States  Gov- 
ernment have  one  of  his  vessels  at  that  price,  that  he  would  go 
to  Washington  and  settle  things.  The  Shipping  Board  repre- 
sentative asked  him  what  he  wanted,  saying,  "  You  have  a 
schooner  that  cost  $50,000  before  the  war  and  she  sold  for 
$75,000,  then  for  $100,000,  and  you  bought  her  for  $150,000, 
and  you  are  now  making  40  per  cent  on  that.  What  do  you 
want?"  "Why,"  he  said,  "the  shipping  business  was  bad 
before  the  war.  This  is  our  chance  to  make  some  money."  But 
he  took  the  Shipping  Board  rates. 

The  government  very  properly  and  very  reasonably  stuck  to 
its  policy  and,  what  is  of  even  greater  interest,  this  policy  was 
ere  long  enforced  also  upon  neutral  vessels.  So  much  of  the 
world's  trade  was  in  the  hands  of  England,  France,  Italy,  and 
the  United  States  that  there  was  not  room  enough  outside  for 
the  neutral  to  trade  unless  he  came  into  the  ports  of  some  of 
those  countries  or  used  their  coal,  and  so  it  was  virtually  a 
choice  between  taking  the  Allied  government  rates  or  lying  idle. 

The  government  rate  policy  was  admirably  shown  by  an  an- 
nouncement by  the  Shipping  Board,  February  20,  1918. 

The  Shipping  Board  is  endeavoring  to  control  the  rate 
situation  on  transatlantic  voyages. 

There  are  a  number  of  small  vessels  which  are  not  with- 


200         IXFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

in  the  requisition  size  that  have  been  making  these  trips 
under  exorbitant  rates,  and  after  consideration  of  the  mat- 
ter by  the  ship-control  committee  it  has  been  decided  that, 
after  February  20,  lUiy,  no  American  steamship  under 
2,500  tons  dead-weight  will  be  permitted  to  clear  for  a 
transatlantic  voyage  or  to  engage  in  other  long  voyage 
trades. 

This  ruling  has  been  adopted  by  the  United  States  Ship- 
ping Board  as  a  measure  of  conservation  and  economical 
use  of  tonnage,  since  in  its  judgment  steamships  of  small 
tonnage  are  uneconomical  and  unsafe  in  the  trades  in  ques- 
tion. Steamships  so  excluded  will  be  employed  in  the 
coastwise,  West  Indies,  or  other  appropriate  service. 

On  the  23d  of  May  the  Shipping  Board  announced  that  on 
June  1,  it  would  reduce  the  base  rate  50  cents  per  ton  per  month 
on  all  boats  that  had  been  requisitioned  on  the  bare-boat  basis. 
For  other  vessels  on  which  the  owner  paid  the  crew,  etc.,  the 
rate  was  unchanged. 

The  requisitioning  of  all  shipping  was,  however,  more  an  act 
of  government  control  of  industry  than  of  government  opera- 
tion. Its  purposes  were  twofold :  one  to  control  rates,  the  other 
to  see  that  shipping  was  utilized  in  places  and  trades  where  it  was 
most  needed.  These  objects  could  be  obtained  without  the  neces- 
sity of  actual  governmental  operation.  The  liners  were  at  once 
handed  back  to  their  original  owners  to  operate  for  government 
account,  and  the  cargo  vessels  when  not  operated  by  the  Navy, 
War  Department,  or  Shipping  Board,  were  chartered  out  to 
brokers  who  operated  them  as  before.  Some  of  them,  particu- 
larly some  of  the  captured  German  vessels,  were  handed  over 
to  foreign  governments. 

Shipping  Moved  from  Pacific  to  Atlantic 

One  of  the  first  acts  after  the  requisitioning  went  into  force 
was  to  move  150,000  tons  of  American  shipping  from  the  Pacific 
to  the  Atlantic,  thus  leaving  the  Japanese  in  charge  of  the  Pacific 
trade,  but  giving  us  more  vessels  for  coast  and  transatlantic 
trade.     In  the  same  way  lake  steamers  were  transferred  to  the 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       201 

Atlantic,  although  many  of  them  had  to  be  cut  in  two,  taken 
around  in  pieces  and  put  together  after  they  got  through  the 
canals.    This  process  is  still  going  on. 

Exchange  of  Vessels  with  France 

Another  rearrangement  of  shipping  that  occurred  at  this  time  ^ 
was  the  exchange  of  vessels  with  France.  Owing  to  the  help- 
lessness of  a  sailing  vessel  in  the  submarine  zone,  the  French 
Government  made  a  temporary  exchange  of  400,000  tons  of 
French  steel  sailing  vessels  for  150,000  to  200,000  tons  of 
steamers,  the  steamers  to  go  in  the  submarine  zone,  the  sailing 
vessels  to  be  used  in  American  trade  outside  the  submarine 
zone. 

Australian  Wheat  via  California 

Akin  to  this  last  arrangement  was  the  literally  far-fetched 
attempt  to  get  Australian  wheat  to  Europe  by  carrying  it  across 
the  Pacific  Ocean  in  sailing  vessels,  to  be  ground  in  California 
mills,  taken  by  rail  to  the  Gulf  ports  (for  which  service  the 
Southern  Pacific  Railway  made  slight  reduction  in  freight  rates) 
and  carried  thence  in  steamers  to  France.  There  was  actually 
some  grain  movement  to  California  under  this  plan. 

All  these  changes  were  rather  bewildering  at  times  to  the 
shipowner  who  was  not  always  informed  of  what  was  going 
on  so  long  in  advance  as  he  would  like,  and  did  not  always  un- 
derstand it  even  when  he  knew.  For  example,  one  shipowner 
cited  the  case  of  a  schooner  that  he  had  been  loading  with  oil 
for  France.  He  had  secured  all  permits  necessary,  cleared  from 
the  Philadelphia  custom  house,  and  the  vessel  was  being  towed 
down  the  river.  At  League  Island  (below  the  city)  a  government 
cutter  called  her  back.  As  to  the  reason  why,  no  answer  except 
some  discourteous  remarks.  The  vessel  was  brought  back  to 
Philadelphia,  the  crew  ordered  to  remain  without  communication 
from  land.     The  tug  had  to  be  paid,  and  so  did  the  pilot  who 

'  Philadelphia  Public  Ledger,  October  20,  1917. 


202  IXFLUENCn    OF    THE    GREAT    WAR    UPON    SHIPPING 

was  already  on  l)oar(I.  Two  days  later  the  captain  received  in- 
formation from  the  navy  that  sailing  vessels  were  not  allowed 
to  proceed  to  France.  At  the  same  time  other  sailing  vessels  were 
loading  at  other  ports,  and  agents  thought  they  were  acting  in 
entire  propriety/ 

The  same  complaint  was  made  "  of  a  steamer  that  was  partly 
loaded  at  New  Orleans.  Thence  it  came  to  Philadelphia  to  com- 
plete cargo;  secured  permits  to  ship  everything  they  had  on  her, 
and  when  loaded,  about  ready  to  go,  received  orders  that  she 
could  not  sail.  A  trip  to  Washington  to  find  out  the  reason  she 
could  not.  brought  no  answer  except  that  she  could  not,  and 
there  the  boat  lies.  They  can't  get  her  clT,  and  can't  find  the 
reason  why  she  can't  go." 

We  had  to  create  our  ship  control  organization  with  great 
speed,  and  upon  the  whole  there  seems  to  have  been  less  com- 
plaint from  shipowners  in  this  country  than  in  Great  Britain. 
Certainly  there  has  been  no  more. 

The  Need  of  Organization 

After  we  had  exercised  our  powers  of  taking  over  nearly 
everything,  we  duplicated  England's  experience  by  getting  into 
trouble  that  could  only  be  cured  by  unified  control.  The  year 
1917  ended  with  an  autumn  of  gathering  trouble.  We  were 
now  sending  troops  and  supplies  to  France,  and  had  three  nearly 
independent  authorities  operating  ships  for  government  account, 
the  War  Department,  the  Navy  Department,  and  the  Shipping 
Board.  In  addition  the  Shipping  Board  was  exercising  vast  con- 
trol of  the  movement  of  ships  by  licensing  every  voyage.  The 
traffic  both  upon  sea  and  upon  American  railways  was  greater 
than  the  facilities  could  handle.  It  was  naturally  a  period  when 
unsatisfactory  conditions  should  be  expected  to  show  themselves. 
It  takes  vast  planning  to  perform  such  a  task,  even  with  the 
leisure  and  possible  prearrangement  of  peace.  When  haste  is 
added  to  war.  and  trade  exceeds  facility,  it  is  natural  that  in- 
efficiency should  occur,  such  as  some  of  the  things  reported  by 

'  Interview,  December  22,  1917. 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       203 

R.  G.  Carroll,  officially  credited  correspondent  with  the  Ameri- 
can Army  abroad. 

After  inspecting  our  port  of  debarkation  in  France,  he  told 
of  steel  rails  being  sent  back  to  America  as  ballast,  of  knock- 
down houses  among  a  thousand  parts  of  which  there  was  not  a 
complete  house,  of  three  days  spent  to  get  a  boiler  out  of  a  hold 
because  it  filled  the  hatchway  full  and  the  slings  which  should 
have  been  left  upon  it  had  been  removed  when  it  was  dropped 
into  place;  of  cargo  so  mixed  that  boats  had  to  be  shifted  from 
side  to  side  of  the  harbor  to  get  at  first  the  little  cranes  and  then 
the  big  cranes ;  of  thousands  of  loose  magazines  and  newspapers 
for  soldiers'  reading  lying  loose  on  the  wharves;  truck  chassis 
waiting  for  six  weeks  for  their  trucks,  which  were  in  some 
other  vessel.^  No  one  could  be  blamed  for  the  fact  that  the 
attempt  to  reinforce  the  Italians  during  the  German  drive  in 
December  made  it  necessary  for  France  to  utilize  her  rolling 
stock  to  such  an  extent  that  15,000  American  troops  lay  for  three 
weeks  on  ships  in  a  French  port,  short  of  both  food  and  water. 
But  the  Patriotic  Education  Society  made  severe  arraignment 
of  the  general  conditions. 

The  government's  obsolete  methods  in  handling  sea 
transport  operations  are  causing  the  virtual  waste  of  a 
great  amount  of  tonnage.  .   .   . 

Consider  only  the  loss  due  to  the  convoy  system  as  oper- 
ated at  present.  First  of  all,  there  is  loss  of  time  while 
the  merchant  fleet  is  gathering  at  the  port  of  departure. 
An  ocean  liner  frequently  consumes  more  time  waiting  for 
its  companion  ships  than  it  formerly  took  to  cross  the 
Atlantic.  Once  at  sea,  the  fleet  may  be  divided  into  two 
squadrons.    The  speed  of  each  squadron  can  not  be  greater 

'  "  Here  1  am,"  declared  a  frantic  looking  ship  operator  of  much  experi- 
ence who  was  donating  $20,000  worth  of  time  per  year  (at  prewar  rates)  to 
the  government's  embarkation  service,  "trying  to  dispatch  ships  for  the 
government,  and  my  helpers  don't  know  the  bow  of  a  ship  from  the  stern, 
while  hundreds  of  the  fellows  who  know  have  been  taken  ofif  to  the  army 
camp  where  they  are  no  more  account  than  any  wop." 

By  March  this  same  man  found  his  staff  greatly  improved  as  a  resuU  of 
the  adoption  by  the  War  Department  of  a  more  careful  attitude  toward  the 
relationship  between  a  man  and  his  qualifications  for  his  job. 


204         INFLUENCE    OF    THE    GREAT    WAR    UPON    SIlII'lMXr, 

than  the  speed  of  the  slowest  vessel.  The  division  is  so 
unscientifically  handled  that  a  vessel  accustomed  to  travel 
at  fifteen  or  twenty  knots  is  reduced  to  ten  knots.  All  of 
this  means  that  a  fleet  ocean  greyhound — we  will  say  one 
of  more  than  ir>,()0()  tons  capacity — sometimes  takes  thirty- 
one  days  to  get  to  the  other  side,  when  she  is  capable  of 
making  the  passage  in  six  days,  an  absolute  loss  of  about 
45,000  tons  a  month  on  thi^  ont-  vessel. 

Confusion  and  delay  in  the  moving  of  men  and  material 
are  another  result  of  adherence  to  red  tape  regulations  and 
impractical  methods.  These  have  utterly  broken  down  in 
the  {)resent  great  emergency. 

Although  the  personnel  of  the  United  States  War  De- 
partment has  had  no  practical  experience  in  shipping  trans- 
portation, it  is  exercising  a  jurisdiction  over  intricate  and 
extensive  shipping  operations  that  only  shipping  men 
familiar  with  large  problems  can  successfully  administer. 
Instead  of  regarding  transportation  operations  as  wholly 
a  business  consideration  to  be  handled  with  strictly  business 
methods,  army  officers  look  upon  them  entirely  from  a 
military  point  of  view.' 

An  American  exporter  of  much  experience  confirmed  at  this 
time  the  frequently  stated  estimate  that  shipping  was  being 
operated  altogether  at  about  50  per  cent  efficiency  because  of  the 
delays  incumbent  upon  loading  and  unloading  in  crowded  ports 
(see  Chapters  II  and  VI),  and  the  further  great  delays  of  the 
necessary  convoy  system.  We  had  a  period  of  disturbed  in- 
dignation in  this  country  much  like  the  one  in  England  that 
preceded  the  unification  of  shipping  management  there. 

One  shipping  company  whose  ships  have  been  com- 
mandeered by  the  board  and  are  being  operated  by  it, 
states  that  those  ships  are  not  doing  50  per  cent  of  the 
work  they  would  be  doing  under  private  management. 

"  See  that  steamer  out  there,"  said  an  officer  of  a  steam- 
ship company.     "  That's  one  of  our  commandeered  boats. 

*  Philadelphia  Public  Ledger,  November  20.  1917. 


AMERICAN'    COXTROL    AND    OPERATION    OF    SHIPPING       205 

To  my  positive  knowledge  she  has  been  lying  at  anchor  for 
three  weeks,  empty  as  a  toy  balloon,  waiting  for  orders  from 
Washington.  The  chances  are  that  some  clerk  is  the  only 
person  who  has  official  knowledge  of  the  status  of  that  boat 
and  has  forgotten  to  tell  somebody  in  authority  about  it. 
Some  day  somebody  wall  check  up  the  list  of  commandeered 
boats  and  then  it  will  be  discovered  that  a  3,000-ton  ship 
has  been  wasted  for  weeks."  ^ 

December  was  a  month  when  the  American  official  mind  began 
to  appreciate  the  necessity  of  drastic  change.  Our  piers  were 
piled  almost  to  the  eaves  with  goods  for  export.  Freight  cars 
by  the  thousand  were  serving  as  additional  storage  houses,  and 
railway  freight  conditions  got  worse  and  worse.  Just  as  in 
England  they  consolidated  all  railway  systems  into  one  national 
system,  so  on  December  28,  1017,  we  announced  the  unifica- 
tion'  of  American  railways  into  one  national  system,  and  the 
pooling  of  their  resources.  And  just  as  Sir  Joseph  Maclay, 
upon  being  made  Controller  of  British  Shipping,  had  called  two 
years  before  for  a  reduction  in  British  imports,  so  plans  were 
begun  in  Washington  for  the  systematic  reduction  of  our  im- 
ports. 

The  January  Traffic  Crisis 

January  was  a  month  of  crisis,  with  alarming  conditions  which 
brought  drastic  changes  in  shipping  organization.  It  w^as  one 
of  the  coldest  months  on  record  and  one  of  the  worst  for  snow 
blockades.  On  January  1  there  were  7,086  carloads  of  freight 
standing  on  wheels  at  New  York,  and  for  six  North  Atlantic 
ports  there  was  a  total  of  41,108  carloads  of  freight  waiting 
for  export.  Port  congestion  made  it  necessary  to  handle  and 
rehandle  freight  in  warehouses  to  get  the  particular  consign- 
ments for  particular  ships,  and  to  shift  and  reshift  freight  cars 

*  Nr'i'  York  Tribtme,  November  24,  1917.  ,  ,       , 

^Th.^  affords  an  admirable  example  of  inability  to  learn  by  the  experience 
of  others  Our  railways  had  been  in  trouble  with  their  traffic  for  a  year 
Enel^h  officials  had  urged  us  to  consolidate  our  railroads  to  get  ready  for 
3e?  but  w-e  waited  until  the  breakdown  became  acute  in  the  snow  blockade 
of  December. 


20G  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

in  the  crowded  yards  to  get  the  cars  with  goods  for  particular 
ships,  all  of  which  meant  delay  in  loading.  This  congestion 
had  many  causes:  increase  in  traffic,  shortage  of  ships,  removal 
of  expert  men  by  the  draft,  and  especially  the  breakdown  of 
the  old  individualistic  system  of  competition,  and  supply  and 
demand.  This  is  well  illustrated  by  the  work  of  the  freight 
contractors  who  had  for  many  years  sought  cargo  to  ship,  and 
then  sought  and  freely  found  all  the  ship  space  they  wanted  in 
which  to  ship  it. 

Avarice  of  foreign  freight  contractors  and  eagerness 
of  shippers  to  move  their  export  shipments  is  one  of  the 
causes  of  the  freight  congestion  in  New  York  and  one 
reason  why  thousands  of  freight  cars  are  tied  up.  accord- 
ing to  a  steamship  man  in  Philadelphia,  who  is  conversant 
with  conditions. 

These  contractors,  he  said,  are  speculators  in  the  freight 
market.  Their  method  is  to  book  certain  space  on  a  steam- 
ship and  then  contract  with  shippers  to  move  their  freight, 
invariably  charging  the  shipper  a  much  higher  rate  of 
freight  than  they,  in  turn,  paid  the  steamship  company. 

Of  course,  he  said,  when  a  freight  contractor  booked 
2,000  tons  of  freight  when  he  had  steamship  space  for  only 
500  tons,  it  means  that  1,500  tons  of  freight  for  which 
there  was  no  steamship  had  come  to  the  seaboard.  This 
freight  blocked  the  yards  and  occupied  cars  that  might 
have  been  moving  freight  for  which  steamship  space  had 
been  reserved.  In  this  manner  thousands  of  cars  were 
brought  to  the  seaboard  and  added  to  the  congestion  already 
existing.  Sometimes  these  men  would  have  five  consign- 
ments of  freight  coming  to  the  seaboard  when  they  had 
room  for  only  one  of  them.^ 

This  condition  of  port  congestion  with  the  resultant  car 
shortage  aggravated  by  the  snow  blockades,  caused  213  ships 
to  be  waiting  in  New  York  for  bunker  coal  on  January  15." 
After  a  week  of  strenuous  efforts  there  were  still  81  ships  wait- 
ing for  coal.     Some  of  them  lay  long  enough  for  coal  to  be 

'  Philadelphia  Ptiblic  Ledger,  January  26,  1918. 
=  Ibid.,  January  22,  1918. 


AMERICAN    COxMTROL    AND    OPERATION    OF    SHIPPING       207 

sent  out  from  England  to  supply  them.  One  Spanish  vessel  in 
Hampton  Roads  was  compelled  to  burn  her  furniture  to  keep 
steam  pipes  from  freezing.  It  was  at  this  time  that  the  coal 
administration  enforced  its  almost  complete  temporary  shut- 
down of  American  coal  using  industries,  whereby  in  the  vicinity 
of  New  York  alone  40,000  establishments  and  more  than  2,000,- 
000  employes  were  compelled  to  be  idle.  To  make  matters 
worse,  it  was  at  this  time  that  Lord  Rhondda,  the  British  Food 
Administrator,  sent  his  alarming  call  for  more  food : 

Unless  you  are  able  to  send  the  Allies  at  least  75,000,000 
bushels  of  wheat  over  and  above  what  you  have  exported 
up  to  January  1  and  in  addition  to  the  total  exportable  sur- 
plus from  Canada.  I  can  not  take  the  responsibility  of  assur- 
ing our  people  that  there  will  be  food  enough  to  win  the 
war. 

The  relative  conditions  of  New  York  and  Philadelphia  show 
the  need  of  some  of  the  drastic  reorganizations  that  promptly 
came.  Mr.  George  S.  Webster,  director  of  Philadelphia 
Wharves  and  Docks,  said  :  ^ 

There  are  vessels  tied  up  here  in  New  York  that  are 
paying  as  high  as  $2,500  per  day  demurrage  when  they 
would  just  as  well  be  loading  in  Philadelphia.  Some  of 
these  ships  have  been  held  up  here  for  many  days  because 
of  lack  of  coal. 

At  the  same  time  he  exhibited  a  map  for  the  port  of  Phila- 
delphia which  showed  that  at  noon  the  previous  day  there  were 
29  vessels  loading  at  Philadelphia  with  berths  for  42  more. 
Yet  at  the  same  time.  D.  J.  :\Iurphy,  boss  stevedore  of  Phila- 
delphia, complained  that: 

The  congestion  at  Pier  39,  the  Quartermaster's  dock  in 
Philadelphia,  is  very  bad  and  something  must  be  done  at 
once.  The  pier  is  piled  to  the  roof  with  war  supplies,  sup- 
plies which  should  be  on  the  way  to  France.     In  addition 

'  Philadelphia  Bulletin,  January  24,  1918. 


208  INFLUENCE    OF    THE    GREAT    WAR    LTOX    SHIPPING 

automobile  trucks  loaded  with  supplies  are  lined  up  for  six 
squares  outside  the  pier.  We  must  have  more  ships,  and 
it  must  be  done  at  once.^ 

Plainly  there  was  need  of  system  in  the  control  of  trade,  from 
the  siding,  at  the  farm,  the  mine,  the  factory,  straight  to  the  rail- 
way port  terminal,  the  ship  and  the  point  of  linal  consumption 
on  the  other  side.  That  was  the  task  which  the  January  tie-up 
forced  into  the  teeth  of  the  Allies,  particularly  the  American 
Shipping  Board  which  had  become  the  chief  depository  for  the 
authority  for  the  carrying  of  our  trade. 

Steps  in  the  Organization  of  Shipping  Management 

A  number  of  interesting  steps  have  been  taken  to  bring  about 
that  even  flow  of  goods  so  necessary  to  the  best  utilization  of 
our  facilities.  The  Tide-Water  Coal  Exchange,  mentioned 
above  (see  Chapter  II),  is  a  perfect  example  so  far  as  it  goes 
of  better  utilization  of  the  coal  terminal  facilities  and  barges 
within  the  port. 

Iiiiproz'oncnt  in  Coal  Handling  Facilities 

On  March  22  the  Shipping  Board  announced  that  it  was  sur- 
veying all  our  leading  seaports  to  see  how  coaling  arrangements 
could  be  enlarged  and  improved.  The  need  of  such  improvement 
was  cited  by  Joseph  A.  Hall,  Deputy  State  Fuel  Administrator 
for  New  York,-  when  he  said  : 

New  York  as  a  port  always  has  been  behind  the  times. 
The  ports  on  the  Great  Lakes,  for  example,  have  been  using 
machinery  for  loading  and  unloading  vessels  that  the  folks 
here  never  even  heard  of.  Thev  can  handle  more  freis^ht 
and  coal  m  the  same  time  by  long  odds  than  can  be  done 
here  in  New  York.  Until  we  learn  something  from  the 
ships  along  the  lakes,  we  will  never  solve  this  problem. 

^  Philadelphia  Bulletin,  January  24,  1918. 
-  Ibid.,  January  22,  1918. 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       209 

Control  of  Barges  and  Tugs 

The  example  of  the  Tide-Water  Coal  Exchange  was  almost 
exactly  duplicated  by  giving  one  man  similar  authority  over 
barges  and  tugs  in  the  coastwise  coal  trade. 

One  thing  more  than  anything  else  that  helped  the  speed- 
ing up  of  vessels  is  the  power  given  to  Captain  Crowley  to 
dispatch  tugs  from  here  and  also  from  coal  ports  with 
whatever  barges  are  ready,  regardless  of  whether  or  not 
they  belong  to  the  same  concern  that  owns  the  tugs. 

In  this  way  tows  have  been  kept  moving  where  serious 
delays  might  have  resulted  under  the  old  methods.  In  other 
words,  Captain  Crowley  has  complete  control  of  the  fleet 
of  tugs  and  barges  both  as  regards  their  movements  and 
the  ports  at  which  they  shall  load  and  discharge.^ 

The  Official  Speeder-up 

The  Shipping  Board  sent  men  to  the  various  ports  whose  task 
it  was  to  see  that  vessels  were  being  handled  with  all  the  speed 
possible.  One  of  the  findings  in  this  piece  of  work  was  that 
when  a  vessel  entered  Philadelphia  she  had  to  make  five  stops 
between  the  breakwater  and  the  port  for  examination  by  sundry 
government  departments  when  shipping  men  said  all  the  in- 
spections could  have  been  made  at  one  time  and  place. 

War  Port  Boards 

In  the  autumn  of  1917  War  Port  Boards  were  appointed  in 
several  of  our  ports.  That  in  New  York  had  men  from  the 
Shipping  Board,  Navy  Department,  and  War  Department,  sit- 
ting with  a  previously  existing  joint  board  appointed  by  the  gov- 
ernors of  New  York  and  New  Jersey  which  had  been  working 
on  the  question  of  the  orderly  development  of  the  port.  This 
new  board  found  that  the  various  government  department  heads 
were  rushing  freight  to  New  York  as  fast  as  they  could,  hoping 
for  ships  to  move  it. 

'  Letter :  Boston  Chamber  of  Commerce,  February  14,  1918. 


210  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Coordination  of  Freight  and  Facilities 

One  of  the  first  things  this  board  did  was  to  attempt  to  get 
Washington  authorities  to  work  out  routing  plans  whereby 
goods  would  come  to  the  port  only  when  ships  were  there  to 
handle  them.  This  was  attempted  by  the  general  operating 
committee  of  the  eastern  railroads,  and  by  midwinter  they  were 
making  a  systematic  attempt  to  regularize  export  movements. 

Before  this  committee  will  allow  a  shipment  to  start 
from  the  interior,  it  ascertains  from  the  steamship  company 
whether  room  actually  has  been  reserved  for  that  cargo 
and  that  exporters'  licenses  have  been  obtained.  In  this 
manner  no  goods  are  allowed  to  come  forward  unless  a 
ship  is  ready.  Even  then  the  shipment  is  not  allowed  to 
start  from  the  interior  unless  the  ship  is  in  sight  or  in  the 
port  where  the  cargo  is  to  be  loaded.^ 

This  problem  showed  the  real  situation.  We  had  not  yet  de- 
veloped the  concept  of  a  unification  in  control  in  freight  han- 
dling to  take  charge  when  the  excess  of  traffic  over  facilities  broke 
down  the  old  unorganized  individualistic  system. 

An  even  greater  lack  was  discovered  in  that,  despite  the  fact 
that  war  is  an  economic  struggle,  we  had  had  no  economic  gen- 
eral staff  back  of  w^ar  activities  in  either  industry  or  transporta- 
tion. As  an  evidence  of  the  possibilities  in  this  field,  some  per- 
sons believed  at  the  end  of  January  that  at  least  a  million  tons 
of  shipping  would  be  gained  by  the  new  plan  of  shipping  co- 
ordination that  had  been  just  then  agreed  upon  at  Washington. 

Mr.  Henry  L.  Gantt,  efficiency  engineer,  in  speaking  of  our 
industrial  difficulty,  said : 

The  national  machine  is  built  wrong.  Divided  responsi- 
bility in  governmental  work  has  been  responsible  for  more 
messes  than  you  can  think  of. 

Perhaps  the  way  to  show  that  we  were  sailing  without  economic 
pilots,  is  to  repeat  two  questions  and  answers  given  and  received 
by  Mr,  Lincoln  Colcord,  who,  by  cjuestioning  the  head  of  the 

^  Philadelphia  Public  Ledger,  January  26,  1918. 


AMERICAX    CONTROL    AND    OPERATION    OF    SHIPPING       211 

War  Department  and  the  head  of  the  Shipping  Board,  showed 
that  the  real  problem  then  had  no  one  to  provide  for  it. 

Question — Whose  business  is  it  to  say  how  the  present 
available  American  ship  tonnage  shall  be  used  to  the  best 
advantage  ? 

Chairman  Hurley — That  is  distinctly  a  question  for  the 
Secretary  of  War  to  decide. 

Question — Whose  business  is  it  to  say  how  the  present 
available  American  ship  tonnage  shall  be  used  to  the  best 
advantage  ? 

Secretary  Baker — That  is  distinctly  a  question  for  the 
Shipping  Board  to  decide. 

"  I  am  here  only  to  supply  ships,"  said  Mr.  Hurley.  "  H 
Mr.  Baker  comes  to  me  and  wants  twenty-five  ships,  I  have 
to  go  out  and  get  them  for  him.  I  have  nothing  to  do  with 
his  war  plans.  He  makes  up  his  plans,  estimates  how  many 
ships  he  will  need  and  then  comes  to  me  for  the  ships." 

"  But  suppose  there  was  a  serious  shortage  of  ships,  and 
you  knew  it,  and  suppose  you  had  to  take  ships  from  a  field 
where  they  were  vitally  needed,  what  would  you  do?  " 

"  That  is  not  my  business,"  he  answered.  "  My  business 
is  to  build  ships  and  get  ships  and  run  ships."  ^ 

No  chaos  in  industry  is  too  great  to  result  from  such  chaos  in 
plan.  It  is  scarcely  reasonable  to  expect  thorough  plans  to  have 
been  worked  out  for  so  large  and  so  new  a  problem  in  so  short  a 
time.  The  staff  idea  and  advance  plans  have  been  at  a  low  ebb 
in  the  United  States.  And  unfortunately  we  are,  as  a  nation,  still 
largely  in  that  undirected  condition,  but  moving  step  by  step 
toward  an  ordered  national  effort.  The  ship  was  one  of  the  first 
things  to  be  ordered  because  it  was  one  of  the  first  things  to 
become  painfully  chaotic  and  acutely  scarce. 

Shipping  Control  Committee 

After    this    lack    of    plan    had    brought    its    natural    results 
of  general  confusion,   we  were  quite  wdlling  to   act  upon  the 

'  Philadelphia  Public  Ledger,  October  17,  1917. 


212         INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

previously  made  British  suggestion  and  appoint  a  shipping  con- 
trol committee  which  should  unify  the  control  of  American  ships 
and  to  go  }'et  further  by  pooling  them  with  our  Allies.  After 
a  conference/  two  committees  were  formed.  Messrs.  Franklin 
and  Thomas  of  the  International  Mercantile  ^Marine  and  "Sir. 
Raymond  of  the  Clyde  Line,  were  the  American  committee, 
while  Messrs.  Thomas  and  Raymond  of  this  committee  and  Sir 
Connup  Guthrie,  representing  the  Britfsh  Admiralty,  took  charge 
of  interallied  affairs.  The  committee  was  given  authority  to 
divert  any  and  all  shipping  to  whatever  ports  seemed  best  able  to 
handle  it.  Thus  vessels  bound  to  the  congested  port  of  New 
York  could  be  ordered  by  wireless  to  Philadelphia,  Baltimore, 
or  Charleston,  or  wherever  the  best  opportunities  for  loading 
were  to  be  had.  There  was  no  law  giving  the  committee  author- 
ity to  tell  American  shippers  to  what  ports  they  must  send  their 
goods,  but  by  its  control  of  ships  this  new  committee  could  tell 
the. shipper  that  the  vessels  to  carry  his  goods  were  to  clear  from  a 
certain  port  and  he  had  no  choice  but  to  send  his  goods  where 
the  ship  would  be.  This  new  committee  brought  under  one 
control  ships  that  had  previously  been  operated  by  three  inde- 
pendent and  by  no  means  overfriendly  departments :  namely, 
naval  transport,  army  transport,  and  the  Shipping  Board.  Inci- 
dentally also  the  personnel  showed  the  conversion  of  the  Admin- 
istration to  the  policy  of  placing  business  in  the  hands  of  the 
men  who  know.  It  is  to  be  hoped  that  all  this  combination  of 
new  authorities  will  make  impossible  the  recurrence  of  such  a 
criminally  wasteful  episode  as  the  following  example  of  delay 
while  indi\»iduals  quarreled  over  profits. 

A  sailing  vessel  loaded  with  oil  for  France  had  secured  ad- 
vance payment  of  freight.  As  she  started  to  sail  she  was  ordered 
back  by  a  captain  of  the  navy,  and  lay  at  her  berth  in  idleness 

'  This  conference  was  attended  by  Chairman  Hurley  of  the  Shipping 
Board,  Judge  Edward  Chambers  of  Director  General  McAdoo's  staff,  Major 
Coates  of  the  War  Department,  Commander  Belknap  of  the  Navy  Depart- 
ment, Mr.  Raymond  and  Mr.  Franklin,  E.  T.  Chamberlain,  Sir  Connup 
Guthrie,  Sir  Richard  Crawford,  commercial  attache  of  the  British  Embassy, 
and  E.  M.  Raeburn,  British  shipping  authority.  Philadelphia  Public  Ledqer 
January  3,  1918. 


AMERICAN    CONTROL   AND    OPERATION    OF    SHIPPING       213 

from  the  20th  day  of  September,  1917,  until  the  22d  of  the  en- 
suing January,  when  at  last  with  a  lawsuit  still  pending  for  the 
prepaid  freight,  her  cargo  of  oil  was  discharged  into  an  army 
transport,  although  the  transport  at  the  time  could  not  get 
coal  to  sail. 

A  Supreme  Shipping  Council 

Still  further  to  unify  plans  and  if  possible  to  increase  the 
efficiency  of  shipping,  Colonel  House  on  his  visit  to  Europe 
late  in  1917  suggested  an  Allied  Maritime  Transport  Council 
which  held  its  first  meeting  in  London  on  March  13,  1918,  when 
the  following  announcement  was  made : 

The  council  will  have  a  permanent  organization  consist- 
ing of  four  citizens,  one  for  each  government.  The  council 
will  obtain  through  its  permanent  staff  programs  of  import 
requirements  for  each  of  the  main  classes  of  essential  im- 
ports and  full  statements  as  to  the  tonnage  available  to  the 
respective  governments.  It  will  examine  the  import  pro- 
grams in  relation  to  the  carrying  power  of  the  available 
tonnage  in  order  to  ascertain  the  extent  of  any  deficit  and 
will  consider  means  whereby  such  deficit  may  be  met, 
whether  by  reduction  in  import  programs,  by  acquisition,  if 
practicable,  of  further  tonnage  for  importing  work,  or  by 
more  economical  and  cooperative  use  of  the  tonnage  already 
available. 

The  members  of  the  council  will  report  to  their  respective 
governments  with  a  view  to  making  sure  that  the  action 
required  to  give  effect  to  any  recommendations  made  by 
the  council  are  taken  in  their  respective  countries. 

Controlling  Commerce  to  Relieve  Shipping 

Reducing  Trade 

In  order  to  economize  ship  space,  we  are  controlling  trade 
along  several  lines.  The  most  important  is  the  cutting  off  of 
trade  that  can  be  spared.  Very  significant  was  the  announce- 
ment, February  9,  1918,  that  the  Shipping  Board  had  created  a 


214  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

division  of  planning  and  statistics  with  E.  F.  Gay,  Dean  of  the 
Harvard  Graduate  School  of  Business  Administration,  at  its 
head.  This  division  works  with  the  War  Trade  Board  in  de- 
termining what  imports  and  exports  can  be  reduced  and  elimi- 
nated. Six  weeks  later  the  War  Trade  Board  announced  a  list 
of  articles  whose  import  would  be  restricted  almost  to  the  point 
of  prohibition  after  April  15.  It  contained  eighty-four  classes, 
beginning  with  agricultural  implements  and  including  such 
classes  as  the  manufactures  of  vegetable  fibers  and  textile 
grasses  except  jute,  gold  and  silver  manufactures  including 
jewelry,  manufactures  of  wool,  goat's  hair,  camel's  hair  or 
alpaca.  Some  estimators  thought  that  1,500,000  tons  of  ship- 
ping had  been  saved  by  this  one  act  alone. 

Foreign  Trade  Reducing  Staff 

Meanwhile,  in  order  to  facilitate  this  process  of  trade  reduc- 
tion the  Shipping  Board  reported  early  in  March  that  it  already 
had  representatives  in  London,  Paris,  Berne,  Scandinavia,  Rio 
Janeiro,  Buenos  Aires  and  Tokio,  and  was  rapidly  completing 
a  foreign  staff  of  commercial  representatives.  The  State  De- 
partment also  was  sending  commercial  attaches  abroad  to  assist 
with  the  work  of  licensing  and  reducing  imports  to  this  country. 

Stimulating  Home  Proditction  of  Imported  Articles 

Secretary  of  the  Interior  Lane  asked  Congress,  February 
23,  for  a  special  appropriation  so  that  a  large  force  of  metal- 
lurgists could  be  employed  at  working  out  necessary  changes  in 
practice  that  would  enable  us  to  use  lower  grade  and  local  sup- 
plies of  metals  of  which  we  now  import  2,000,000  long  tons  a 
year,  most  of  which  might  be,  on  an  emergency,  produced  at 
home.  For  instance,  nitrate,  sulphur,  manganese,  flake  graphite 
for  crucibles,  tin,  mercury  for  explosives,  potash  for  explosives, 
and  fertilizer;  tungsten  for  high  speed  steel,  antimony  for  hard- 
ening bullets,  zirconium  for  armor  plate,  and  tool  steel,  and  mag- 
nesite  used  as  refractory  in  metallurgical  plants. 


AMERICAN    CONTROL    AND    OPERATION    OF    SHIPPING       215 

Scientific  Loading 

Reducing  the  bulk  of  exports  and  imports  is  another  fruitful 
field  for  work.  For  decades  when  space  was  cheap  and  the 
transatlantic  journeys  short,  we  loaded  ships  with  a  bulky  cot- 
ton bale  that  would  fill  the  ship's  hold  full  and  still  leave  most 
of  her  buoyancy  unutilized.     Thus, 

American  cotton  bale  of  22  lbs.  per  cu.  ft.  takes  102  cu.  ft.  a  ton. 
Egyptian         "       "     "  37  lbs.    "     "    "       "       60  "     "   "    " 
Indian  and  Chinese     "  56  lbs.    "     "    "       "       40  "     "   "    " 

This  means  that  a  5,000  ton  vessel  having  200,000  cubic  feet 
of  space  could  carry       1,960  tons  of  American  cotton, 

3,333      "     "    Egyptian       " 

5,000      "     "    Indian 

A  6,000,000  ton  crop  would  require  3,061  vessels  loaded  with 
American  bales,  but  only  1,200  vessels  loaded  with  Indian  bales.  ^ 
Plainly  we  must,  before  another  cotton  crop  is  moved,  smash 
established  and  vested  industrial  conservatism  at  this  point  and 
make  a  cotton  bale  which  is  as  good  as  the  Indian  cotton  bale, 
and  save  a  whole  flotilla. 

Manifestly  many  other  commodities,  especially  fabrics,  are 
capable  of  similar  compression.  Instead  of  canned  foods  70 
or  80  or  90  per  cent  water,  bulky  with  tin  and  wood,  we  can 
send  dried  foods  in  paper  and  burlap  sacks.  Boilers  were  sent 
to  France  in  plates  and  erected  there.  Gun  carriages  also  are 
being  sent  to  France  in  pieces  for  erection.  The  whole  question 
of  scientific  baling  and  packing  is  one  to  which  attention  has 
never  been  given,  for  the  object  of  trade  has  been  to  please  cus- 
tomers rather  than  to  save  freight  space.  Very  considerable 
economies  in  tonnage  may  be  expected  from  this  source  during 
the  year  1918,  and  later. 

Under  scientific  loading  we  might  include  concentration  of 
freight  at  specified  ports  so  that  no  steamer  would  consume  time 
by  loading  at  two  ports,  as  is  the  common  custom. 

'  U.  S.  Commerce  Reports,  October  11,  1917,  p.  153. 


210  IXFLUEXCE    OF    THE    GREAT    WAR    UFOX    SIIIFFIXG 

CONCLUSIOX 

We  now  have  our  shipping  reduced  to  the  status  of  an  arm 
of  the  government.  W'e  may  think  of  the  ship  as  a  company  or 
regiment  of  soldiers  which  operates  singly  or  in  groups,  with 
others  of  its  kind,  obedient  to  the  orders  of  the  supreme  com- 
mand. This  very  great  difference  is  to  be  pointed  out.  The  ship 
and  its  company  are  an  independent  unit  of  civilians,  the  old  in- 
dividualism, even  though  obedient  to  the  supreme  command  as 
to  when  and  where  and  how  the  ship  goes,  what  it  carries,  and 
at  what  rate  of  freight.  It  is  still  a  private  business  enterprise. 
To  all  intents  and  purposes  it  is  a  contractor's  outfit  working 
for  a  government  that  has  taken  its  services  for  a  time.  This  is 
war  policy  and  this  condition  is  to  last  for  the  period  of  the 
war — at  least,  but  the  ship  skill  is  private  skill,  not  government 
skill.  This  raises  to  a  higher  degree  of  interest  the  question  of 
postwar  policy  which  is  discussed  in  another  chapter. 


CHAPTER  VIII 
Shipbuilding  during  the  War — Technical  Development 

Early   Stagnation   and   Revival  in   Building 

During  the  first  weeks  of  the  war  the  stagnation  of  the 
shipping  trade  was  transmitted  to  the  already  equally  stagnant 
shipbuilding  trade.  While  ships  lay  idle  and  a  supposedly  short 
war  pressed,  there  was  no  temptation  to  build  more  ships,  and 
it  was  the  general  opinion  that  there  would  be  no  building  dur- 
ing the  war.  In  August,  1014,  more  than  1,500  men  enlisted 
in  a  single  week  end  from  the  great  shipyards  of  Harlan  &  Wolf 
at  Belfast,  the  builders  of  the  Mauretania,  Liisitania,  and  many 
of  the  crack  ships  of  the  British  fleet. 

In  November  the  world  of  shipping  discovered  the  war. 

The  realization  that  the  war  was  to  be  long  and  that  ships 
were  to  be  scarce,  deluged  the  world's  shipyards  with  two  kinds 
of  orders  at  the  same  time,  naval  and  mercantile.  With  this 
double  pressure,  shipyards  have  worked  with  ever  increasing 
speed  from  the  autumn  of  1914  to  the  present  moment.  Energy 
has  not  been  limited  to  the  mere  matter  of  building  ships.  There 
has  been  equal  activity  in  the  question  of  design.  The  war's 
emergency  in  combat  has  called  for  new  types  of  fighting  ships, 
and  the  war's  emergency  in  trade  has  called  for  simzplified 
types  of  freight  ships. 

Naval  Work 

Some  of  the  early  battles  of  the  war  demonstrated  the  great 
importance  of  the  fast  battle  cruiser,  but  did  not  remove  the  final 
dependence  upon  the  heavy  battleship,  so  there  have  been 
orders  for  battleships  and  battle  cruisers.  Meanwhile  the  fight- 
ing of  the  submarine  became  the  pressing  order  of  the  day.    For 

217 


218  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

this  purpose  there  has  been  speedy  evolution  in  type  of  vessel 
as  the  submarine  has  become  larger.  At  first  a  small  motor  boat 
with  a  light  gun  sufficed,  and  it  is  reported  that  550  of  them  were 
built  in  the  United  States  for  the  British  Navy  in  the  first  two 
years  of  the  war,  but  now  that  the  submarine  has  got  to  carrying 
heavy  guns,  these  small  vessels  no  longer  suffice.  The  energy  is 
being  focused  upon  destroyers  and  flying  boats,  and  a  new  type 
of  mosquito  craft  called  eagles,  being  built  by  Henry  Ford. 
Their  chief  function  is  depth  bombing. 

A  second  special  type  of  boat  designed  for  service  in  the 
war  has  been  the  troop  ship  with  high  speed  to  dodge  the  sub- 
marine. It  also  has  many  compartments  and  large  size  to  take 
several  torpedoes  and  still  float. 

Merchant  Vessels 

For  the  decade  before  the  war  the  attention  of  the  reading 
public,  when  called  to  shipping  at  all,  was  called  to  this  or  that 
fast  passenger  ship,  which  attracted  attention  by  its  speed,  its 
size,  its  luxurious  appointments,  its  elevators,  its  swimming 
pools,  its  close  approach  to  a  great  floating  hotel.  The  war  has 
elevated  to  a  prime  position  the  tramp,  the  common  cargo  car- 
rier for  which  nations  strive  and  pray  and  pay.  The  awful 
demand  for  speed  in  turning  out  these  ships  to  beat  the  subma- 
rine has  set  the  technical  world  into  a  fever  of  study  of  ways 
to  get  them  made  quickly,  with  the  result  that  we  are  now  wres- 
tling with  new  types  of  design,  new  mxCthods  of  construction, 
and  new  materials  of  construction. 

New  Types  of  Design 

(a)    The  Corrugated  Ship 

The  simple  device  of  corrugation,  which  is  well  known,  gives 
added  strength  to  material  built  to  that  form.  This  fact  is  be- 
ing used  to  some  extent  as  a  factor  in  material  saving.  The 
ship's  side  is  corrugated  to  give  it  strength  which  in  other  cases 


SHIPBUILDING    DURING    THE    WAR  219 

it  attains  by  greater  use  of  frame  work.  Such  ships  are  being 
built  in  the  United  Kingdom,  but  their  number  is  not  great  and 
they  are  not  an  important  factor. 

(b)    Standardi::ed  Ships 

Of  all  kinds  now  building,  the  standardized  ship  has  attracted 
the  most  attention,  but  the  standardized  steel  ship  upon  which 
so  much  thought  and  so  much  work  are  being  expended  may 
not  be  the  only  type  that  will  be  important  in  helping  to  carry 
freight  to  win  the  war.  That  honor  may  be  shared  by  the  cement 
ship. 

The  standardized  construction  has  been  adopted  as  the  official 
method  by  the  governments  of  the  United  Kingdom  and  the 
United  States,  both  of  which  are  building  ships.  In  this  country 
standardization  did  not  have  the  bitter  opposition  that  was  met 
in  Great  Britain.  It  is  easier  for  us  to  do  it  than  for  the  British, 
because  we  are  a  less  conservative  people  in  industry,  more  ex- 
perimental, more  scientific,  less  permanent,  more  willing  to  scrap 
machinery.  Again,  our  shipyards  were  so  few  that  most  of  our 
emphasis  upon  standardization  could  be  applied  to  new  yards 
in  which  it  made  no  difference.  England  resisted  it  bitterly, 
partly  because  in  one  sense  she  had  no  standardization,^  and 
in  another  sense  she  had  a  good  deal.  I  say  she  had  no  stand- 
ardization because  every  yard  was  a  law  unto  itself,  and  the 
boast  of  the  common  British  shipyard  was  that  it  could  do  any- 
thing. 

'  A  good  illustration  of  British  individualism  is  afforded  by  Fairplay,  April 
5,  1917,  quoting  Mr.  D.  B.  Morison  of  West  Hartlepool  to  the  effect  that 
"  standard  machinery  adaptable  to  a  useful  range  of  vessels  could  quite  well 
be  constructed  but  for  the  fact  that  Lloyd's  Register,  Board  of  Trade  and 
British  Corporation  Registry  issued  independent  rules;  in  the  making  of  one 
single  ended  boiler  of  specified  dimensions,  the  three  authorities  .  .  .  specify 
three  different  working  pressures." 

For  example,  the  advertisements  in  one  of  the  leading  maritime  papers 
(Fairplay)  the  week  war  was  declared  showed  17  British  firms  advertising 
a  great  variety  of  shipbuilding,  boiler  making  and  engine  making,  in  fact 
practically  anything  in  shipbuilding,  2  appeared  to  be  exclusively  repairers, 
6  seemed  by  their  advertisements  to  be  primarily  engine  and  repair  works, 
1  seemed  to  be  primarily  engine  fitters  to  ships,  16  advertised  accessories  of 
the  more  important  character,  not  including  such  matters  as  paint. 


220  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

While  I  say  they  were  unstandardized,  some  of  the  yards  had, 
however,  adopted  to  a  considerable  extent,  the  practice  of  stand- 
ardization in  that  they  had  built  duplicate  ships, ^  for  even  on  the 
building  of  so  few  as  three  ships  15  per  cent  could  be  saved  if 
they  were  all  alike.  Thirty  years  ago  one  English  firm  made  30 
sailing  vessels  on  the  Clyde  after  the  same  model.  Another 
English  firm  had  the  habit  of  making  one  type  of  freight  ship 
on  speculation  and  selling  them  when  completed.  In  the  early 
part  of  the  war"  several  of  the  leading  English  steamship  com- 
panies organized  a  company  to  build  a  new  shipyard  near  Bristol, 
which  was  to  build  ten  steamships  at  a  time.  They  planned 
to  turn  out  only  one  model,  an  8,000  ton  freighter  to  replenish 
their  depleted  fleets.  In  the  main,  however,  English  shipyards 
not  only  boasted  of  their  wide  variety  of  capacities,  but  every 
shipowner  had  his  own  notions  as  to  what  constituted  the  proper 
ship.  The  shipyards  were  there  to  please  him.  It  was  claimed 
by  many  that  the  supremacy  of  Britain's  shipping  was  due  to  the 
great  variety  of  her  ships,  enabling  them  to  enter  every  port  and 
every  trade.  Consequently,  when  the  British  Government 
•established  its  Ministry  of  Shipping  and  laid  down  a  standard 
model,  opposition,  very  naturally,  expressed  itself,  particularly 
in  a  nation  that  loves  to  grumble. 

Fairplay,  the  partisan  champion  of  the  individual  shipowner, 
commented  editorially : 

The  principle  of  standardization  is  a  deadening,  soul 
destroying  thing.  It  crushes  individuality  of  design  in  pro- 
duction, just  as  it  kills  out  individuality  of  performance 
among  workmen.  Applied  to  design  it  is  exactly  the  same 
idea  as  the  trade  unions  would  apply  to  labor  when  they 
insist  on  uniform  rates  of  wages — the  good  and  the  bad 
workman  to  be  paid  alike.  It  has  a  leveling  effect  which 
converts  individuals  into  cogs  in  the  industrial  machine.  So, 
if  there  is  to  be  progress  in  naval  architecture  after  the 
war,  standardization  must  be  absolutely  abolished  as  a 
compulsory  principle,  and  with  it  must  go  all  idea  of  state 

'  Marine  Reviezv,  July,  1916. 
'  Ibid.,  September,  1916. 


SHIPBUILDING    DURING    THE    WAR  221 

control.  There  can  not  be  continued  state  control  without 
continued  standardization,  and  one  or  the  other,  or  both, 
would  mean  utter  stagnation.  Suppose  the  principles  of 
state  control  and  standardization  were  in  force  when  Dr. 
Kirk  was  evolving  the  triple-expansion  engine  at  Govan, 
and  applying  his  new  ideas  to  actual  vessels. 

The  thing  had  never  been  done  before,  there  were  no  rules 
and  regulations  applying  to  it,  it  was  out  with  the  standards, 
therefore  on  with  the  break. ^ 


And  a2:ain : 


t>' 


It  is  useless  for  anyone  to  contend  that  standardized 
boats  will  get  over  the  "Breach";  they  are  not  the  class 
of  boats  that  the  trade  of  the  country  needs,  and  in  this 
contention  we  believe  that  we  have  all  owners,  and  certainly 
all  our  shipbuilders,  standing  firmly  behind  us.^ 

while  a  British  shipowner,  Walter  Runciman,  expressed  British 
disgruntled  individualism  as  follows : 

Put  an  end  to  the  fandango  moonshine  of  standardized 
ships,  which  nine-tenths  of  the  people  who  use  the  phrase 
imagine  to  be  an  up-to-date,  progressive  invention,  where- 
as the  type  is  wholly  reactionary.  Duplicates  of  ordinary, 
up-to-date  cargo  vessels,  alike  in  every  particular,  could  be 
built  in  a  month  or  six  weeks  less  time;  perhaps  I  am  un- 
derstating it.  ...  I  wonder  if  there  will  ever  be  made 
publicly  known  the  amount  of  time  that  has  been  wasted 
by  the  multiplication  of  alterations,  made  in  a  variety  of 
ways  to  those  immortal  standardized  delusions,  and  how 
many  vessels  of  rational  construction  could  have  been  put 
into  the  water  while  the  altering  and  realtering  has  been 
going  on.  The  thought  of  it  beshames  one's  mechanical 
and  commercial  instincts.^ 

The  official  point  of  view  toward  the  standardized  program 
is  well  stated  in  the  words  of 

Sir  L.  Money,  parliamentary  secretary  to  the  British 
Shipping  Controller,  replying  recently  to  a  question  as  to 

'  Fairplay,  September  13,  1917,  p.  448. 

="  Ibid.,  February  7,  1918. 

'  Glasgow  Herald,  December  29,  1917,  p.  36. 


222  INFLUENCE    OF    THE  'gREAT    WAR    UPON    SHIPPING 

the  building  of  standardized  ships :  "  The  program  of 
standardized  cargo  shipbuilding  which  is  being  carried 
out  is  designed,  under  expert  advice,  to  produce  for  the 
national  use,  in  the  shortest  possible  space  of  time  in  the 
given  circumstances,  vessels  specially  designed  to  meet  the 
conditions  of  war,  and  it  is  not  the  case  that  these  standard 
ships  have  been  substituted  for  vessels  which  are  equally 
suitable.  The  standard  program  is  not  one  of  disorganiza- 
tion; on  the  contrary,  it  is  a  method  of  organization  which 
economizes  time,  material  and  labor."  ^ 

In  getting  up  its  standard  design,  the  British  Government 
asked  various  shipbuilders  who  had  been  building  more  or  less 
standard  ships,  to  send  in  various  designs  simplified  as  much 
as  possible.  One  of  these,  with  some  simplifications,  was 
accepted  as  a  standard,  but  there  was  nothing  revolutionary 
about  it.  It  was  merely  made  as  simple  as  possible.  For  ex- 
ample, the  deck  of  an  ordinary  steamer  curves  from  end  to 
end,  giving  bow  and  stern  some  rise,  but  for  15  years  the  Holt 
Line  vessels  have  been  flat.  For  a  long  time  American  vessels 
have  been  flatter  than  British,  so  the  adoption  of  a  ship  with 
almost  flat  deck  was  not  a  revolutionary  move,  but  it  is  easier 
to  make. 

Nearly  straight  sides  was  another  simplification.  It  used  to 
be  that  the  girders  down  the  side  had  to  be  put  in  the  furnace 
and  heated  at  the  yards  to  be  given  the  exact  curve  at  the  bilge. 
Now  the  bilge  in  the  standardized  ship  is  made  at  almost  right 
angles,  so  the  straight  side  pieces  like  barn  timbers  can  be  used 
and  no  heating  at  the  yard  is  required.  The  nice  curves  of  the  old 
deck  house  are  gone.  It  is  simply  a  plain  rectangular  box.  The 
standardized  ship  is  a  ship  down  to  its  lowest  terms,  and  then 
duplicated. 

The  individualism  and  much  of  the  beauty  of  the  old  ship 
are  gone.  One  hundred  years  ago  the  ship  was  a  work  of  art. 
Every  man  on  it  regarded  himself  as  something  of  an  artist. 
The  carpenters  on  the  outside  of  the  ship  each  had  certain  space 

^Marine  Review,  July,   1917,  p.  249. 


SHIPBUILDING    DURING    THE    WAR  223 

to  work  in  in  putting  on  planks.  They  strove  for  the  most  dif- 
iicuh  work.  It  was  easier  to  do  it  on  the  flatter  parts  of  the  sides 
and  very  difficuh  at  the  extreme  bow.  There  was  a  sense  of 
rivalry  prevailing  among  the  carpenters  for  the  privilege  of 
doing  the  bow.  As  they  each  worked  on  scaffolding  hung  over 
the  edge  of  the  ship,  one  of  their  delights  was  to  leave  a  man 
who  could  not  keep  up  hanging  in  the  air  as  they  worked  up  or 
down  the  ship's  sides.  All  this  individualism  has  gone.  All 
this  beauty  has  gone.  It  is  simply  a  uniform,  modified  stand- 
ardized approach  to  a  box  made  as  nearly  as  possible  in  straight 
lines,  but  a  cheaper,  more  efficient  carrier. 

The  first  British  vessel  built  under  standard  specifications  had 
the  keel  laid  February,  191T,  was  ready  to  sail  on  the  25th  of 
August  and  in  every  way  passed  satisfactory  tests. ^  In  the 
United  States  Government's  shipbuilding  program  the  stand- 
ardized ship  was  accepted  without  any  serious  debate.  We  had 
the  example  of  England's  adoption.  The  war  was  further 
advanced  and  the  imperative  necessity  for  ships  was  manifest. 
Then,  too,  the  American  manufacturer  had  long  been  practising 
the  policy  of  utilizing  standardization  and  interchangeable  parts 
— methods  of  manufacture  which  had  given  us  mechanical  su- 
premacy in  the  reaper,  bicycle,  typewriter  and  automobile,  with 
the  world  renowned  example  of  the  Ford  car  in  every  man's 
mind  and  the  dollar  watch  in  every  man's  pocket.  All  students 
of  machine  shop  practice  were  familiar  with  the  chief  advantages 
of  standardization,  namely,  the  influence  of  repetition  to  reduce 
cost. 

The  Influence  of  Standardization  on  Cost. 

The  expert  machinist,  the  old  style  machinist,  can  take 
any  kind  of  a  machine  and  do  any  kind  of  work,  but  he  is 
now  as  much  out  of  date  as  the  man  who  can  make  a  watch 
or  a  wagon  from  start  to  finish. 

It  is  wasteful  for  one  man  or  one  machine  to  do  many 
kinds  of  work.  The  reason  of  this  is  that  the  machines  are 
elaborate;  they  must  be  adjusted  and  set  for  each  kind  of 

^  U.  S.  Commerce  Reports,  October  23,  1917,  p.  312. 


224         .INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

operation  that  they  perform.  Thus  the  setting  of  a  ma- 
chine to  do  a  piece  of  work  often  takes  more  time  than  the 
actual  doing  of  the  work.  Sometimes  it  takes  a  half  day  to 
reset  the  machine.  Sometimes  it  takes  a  week.  It  may 
take  ten  minutes  to  work  up  one  piece  after  the  ma- 
chine is  set.  Thus  the  costs  of  shaping  a  particular  piece 
of  metal  in  a  machine  shop  were,  for  one  piece,  25  cents, 
for  two  pieces  15  cents  each,  for  five  pieces  10  cents  each, 
for  100  pieces  5  cents  each,  for  500  pieces  3  cents  each. 
Now  we  see  why  it  is  so  much  cheaper  to  make  the  valves 
for  every  one  of  a  hundred  ship  engines  all  alike,  new  style, 
than  it  is  to  make  one  or  two  for  single  or  sister  ships,  old 
style. 

Then,  to  cap  the  climax  of  this  thing,  these  pieces  made 
at  such  low  cost  are  interchangeable,  and  will  fit  into  any 
one  of  tens  of  thousands  of  machines  of  a  certain 
type.  It  is  by  the  utilization  of  these  revolutionary  proc- 
esses, standardization  and  specialization,  that  the  Ford 
car,  the  dollar  watch,  and  the  American  locomotive,  made 
by  highly  paid  men,  are  sold  in  competition  with  the  prod- 
uce of  men  who  work  for  lower  wages  but  on  the  old 
unstandardized  methods. 

The  adoption  of  standardization  gave  the  shipbuilding  in- 
dustry access  to  the  machine  shops  of  the  whole  nation  rather 
than  making  them  dependent  upon  works  immediately  beside 
the  river  bank.  By  assembling  parts  made  to  fit,  the  first  Liberty 
motor  designed  for  aeroplanes  was  made  in  twelve  factories 
scattered  between  Connecticut  and  California.  Ship  design  has 
for  some  time  been  at  the  point  where  the  vessel's  entire  frame, 
floors  and  plates,  can  be  cut  in  lengths  sufficiently  short  to  be 
shipped  on  freight  cars  to  any  point  where  it  is  desirable  to 
assemble  them  into  a  complete  ship.  This  permits  any  steel  mill 
to  make  plates,  angles,  shapes  of  standard  dimensions,  with 
holes  punched  1/8  or  1/16  of  an  inch  scant  allowing  for  ream- 
ing after  the  plates  are  in  place,  all  reaming,  riveting  and  caulk- 
ing being  done  by  engine  power  through  the  aid  of  pneumatic 
tools.  Thus  standardization  of  design  leads  to  distant  manu- 
facture of  parts,  like  knock-down  houses,  and  the  putting  of 
these  parts  together  wherever  it  is  most  suitable.     Thus  we  have 


SHIPBUILDING    DURING    THE    WAR  225 

the  so-called  "  fabricated  "  ship.  This  is  a  tremendous  contrast 
to  practices  prevailing  in  most  shipyards  whereby  each  plate, 
angle,  and  shape  is  a  law  unto  itself  in  dimension,  form,  fitting, 
and  the  number  of  fastenings  required  to  secure  it  in  place,  so 
that  the  ship  is  built  as  a  house  is  built,  by  pieces  made  to  fit  on 
the  spot,  whereas  the  fabricated  ship  of  the  war  emergency 
shipyard  is  to  be  put  together  like  a  knock-down  house  or  the 
parts  of  a  steel  skyscraper.^ 

Mr.  Geo.  J.  Baldwin,  president  of  the  New  York  Shipbuilding 
Co.,  puts  it  thus: 

When  we  first  started  in  on  this  program  of  so  many 
ships  a  year  we  bumped  right  into  a  stumbling  block.  Many 
of  the  skilled  machinists  and  iron  workers  did  not  know 
a  thing  about  building  ships.  Hundreds  of  structural  iron 
shops  had  plenty  of  steel,  but  could  not  furnish  the  fancy 
twisted  shapes  that  had  always  been  required  for  the  build- 
ing of  ships. 

What  did  we  do?  Why,  our  engineers  and  designers 
simply  got  together  and  designed  a  boat  that  could  be 
made  with  the  use  of  straight  beams,  such  as  can  be  turned 
out  in  any  shop  where  bridge  or  structural  iron  work  is 
turned  out. 

We  cut  out  all  curved  sides,  all  camber  decks,  and  we 
are  building  fiat  bottom  ships.  In  this  way  we  are  obviating 
all  the  troubles  that  used  to  enter  into  the  building  of  a 
steamship. 

In  days  gone  by,  and  right  up  to  a  few  months  ago,  it 
was  thought  that  no  boat  could  possibly  get  along  un- 
less it  had  a  camber  deck.  This  means  that  the  deck 
bulged  up  a  little  to  let  the  water  run  of¥  during  heavy 
weather. 

We  figured  that  water  will  run  ofT  a  fiat  surface  almost 
as  quick  as  it  will  any  other  kind,  and  so  we  decided  to 
have  all  our  decks  built  fiat.  We  have  found  that  this  is 
just  as  good,  and  even  better,  than  the  old  way,  and  that 
it  dees  not  require  any  special  rolling  machinery  to  make  the 
beams. - 

'  See  Department  of   Commerce,   Standardisation  in  the   Construction  of 
Freight  Ships.  E.  P.  Stratton,  1916. 

'Philadelphia  Inquirer,  May  ii,  1918. 


226  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

"  It's  like  launching  a  soap  box,"  remarked  a  shipyard  worker 
at  a  recent  launching  on  the  Delaware. 

The  United  States  Government  accordingly  built  three  yards, 
one  at  Hog  Island,  below  Philadelphia,  one  at  Bristol,  above 
Philadelphia,  and  one  at  Newark,  New  Jersey.  The  one  at 
Newark  plans  to  build  50  ships  at  once,  all  exactly  alike,  and 
before  the  first  keel  was  laid  forty-nine  steel  plants  in  different 
parts  of  the  country  were  at  work  making  steel  for  these  ships. ^ 
Thus  thousands  of  men  (and  women)  who  never  saw  the 
sea,  who  never  saw  a  ship,  are  at  work  helping  to  build  ships. 
The  Westinghouse  Company  has  built  a  ship  machinery  fac- 
tory with  35  acres  of  floor  space  and  110  acres  reserved  for 
buildings  near  Chester,  Pa.,  for  the  supply  of  Eastern  ship- 
yards. 

The  first  stage  in  the  work  of  the  famous  Hog  Island  plant 
at  Philadelphia  was  the  building  at  the  nearby  plant  of  the  New 
York  Shipbuilding  Co.  across  the  river  of -a  steamer  complete 
in  every  respect,  after  which  this  model  ship  was  taken  to  pieces, 
each  of  the  20,000  pieces  blueprinted  or  reduced  to  exact  meas- 
urements so  that  they  might  be  duplicated  with  a  degree  of  ex- 
pertness  and  exactness  heretofore  unknown.  These  20,000  pieces 
were  then  let  out  to  contractors  all  over  the  United  States  for 
manufacture,  to  be  assembled  at  the  Hog  Island  plant.  It  is 
claimed  that  careful  planning  of  the  routing  of  material  and 
equipment  about  the  plant  saves  25  per  cent  of  the  construction 
cost. 

This    fabricating    system    undoubtedly    throws    more    strain 

^  It  is  doubtless  true  that  if  all  the  various  plants  busy  on  some  minute 
part,  such  as  valves,  pumps,  compasses,  electric  apparatus,  etc.,  were  counted, 
the  total  number  of  plants  would  reach  into  the  hundreds.  This  enables  a 
bridge  plant  in  Pittsburgh,  a  boiler  plant  in  Ohio,  a  structural  steel  mill  in 
West  Virginia,  and  a  plate  mill  in  Illinois,  to  specialize  and  adjust  their 
machinery  to  make  hundreds  of  thousands  of  duplicate  pieces  for  hundreds 
or  thousands  of  duplicate  ships.  So  an  automobile  plant  here,  a  windmill 
plant  there,  an  engine  shop  yonder,  can  make  some  of  the  parts  of  the 
marine  engine  and  the  rather  numerous  small  machines  that  are  needed  in  a 
ship,  such  as  small  engines  to  hoist  cargo,  pumps  for  water,  pumps  for  oil, 
fans  for  ventilators,  pulleys,  cables,  compasses. 

Standardize,  standardize,  standardize ;  specialize,  specialize,  specialize ! 
Thus  we  can  win  the  war,  {/  we  try.  Fortunately  we  can  try  much  harder 
than  we  are  now  trying. 


SHIPBUILDING    DURING    THE    WAR  227 

Upon  the  railroads  of  the  country  because  of  the  thousands  of 
carloads  of  parts  and  the  tens  of  thousands  of  shipments  of 
pieces,  every  one  of  which  must  be  in  hand  and  in  place  before 
the  ship  can  sail. 

Standardisation  in  Wooden  Ships. 

The  attempt  to  apply  standard  design  to  wooden  ships  has 
proved  less  of  a  success  at  the  hands  of  the  United  States  Ship- 
ping Board.  The  fault  is  not  with  the  principle  of  standardiza- 
tion, which,  however,  is  far  less  effective  in  wood  than  in  steel 
construction.  It  seems  that  the  shipyards  of  Maine  were  accus- 
tomed to  building  a  certain  kind  of  ship  for  which  their  timbers 
'  of  limited  size  and  shape  were  admirably  suited.  These  vessels 
did  not  exceed  2,400  tons  in  capacity.  The  builders  of  the  Pacific 
Coast,  with  the  giant  trees  of  that  region,  could  get  timbers  of 
almost  any  size  they  wished,  and  could  build  larger  vessels. 
The  builders  on  the  Gulf  Coast  had  lumber  of  intermediate  size, 
and  built  a  still  different  type  of  ship  from  either  the  Pacific  or 
Atlantic. 

On  going  into  the  Shipping  Board,  General  Goethals  said  he 
did  not  know  anything  about  ships,  but  he  finally  adopted  the 
Ferris  design  of  wooden  ship,  which  it  is  claimed  was  merely 
a  copy  of  a  steel  ship,  and  gave  little  regard  to  the  material  from 
which  it  was  built.  As  a  result  it  was  exceedingly  difficult  to 
construct  and  required  timbers  of  great  size.  Despite  this  fact, 
General  Goethals.  and  his  successors  on  the  Emergency  Fleet 
Corporation,  adhered  rigidly  to  this  design  as  the  one  and  only 
one  they  wanted  to  build,  with  the  result  that  the  Maine  ship- 
builders could  not  construct  it,  and  the  Gulf  shipbuilders  could 
only  complete  it  after  importing  train  loads  of  special  timbers 
from  the  Pacific  Coast  at  great  cost.  In  the  meantime  the  South- 
ern lumber  manufacturers  had  lost  much  money  in  searching 
their  forests  through  and  through  for  the  rare  trees  that  might 
fill  this  peculiar  lumber  bill  which  they  had  contracted  to  fill. 

There  is  httle  doubt  that   standardization  here  was  carried 
too  far.     The  New  Englanders  could  have  duplicated  their  best 


228  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

schooner  on  one  standard  New  England  design  not  exceeding 
2,400  tons  capacity.  The  Gulf  builders  could  have  had  one 
somewhat  similar  vessel,  whereas  the  Pacific  Coast  could  have 
made  one  above  3,000  tons  with  ease.  As  it  is,  there  have  been 
idle  wooden  shipways  in  the  United  States  during  the  whole 
period  of  the  Shipping  Board's  career,  namely  January,  1917, 
to  May,  1918,  and  during  part  of  that  time  men  have  begged 
in  vain  for  the  privilege  of  building  ships. 

(c)    The  "  Unsinkable"  Ship 

The  unsinkable  ship  has  long  been  the  dream  of  man.  The 
Titanic  and  the  Lusitania  with  their  water-tight  compartments 
were  supposed  to  have  been  such  ships,  but  the  ice  and  the  tor- 
pedoes proved  otherwise.  Their  compartments  were  too  big, 
and  there  is  always  the  possibility  of  torpedoes  hitting  on  the 
line  of  division  between  two  and  flooding  both. 

There  are  ships,  however,  now  sailing  the  seas  that  have  been 
torpedoed  and  have  floated  on  because  the  compartments  were 
not  too  large  and  the  divisions  went  clear  up  to  the  deck  far  above 
the  water  line.  Mr.  J.  W.  Isherwood,  British  ship  designer, 
some  of  whose  plans  have  been  so  extensively  followed,  has  de- 
signed an  ordinary  shelter  deck  vessel  which  British  shipowners 
think  is  a  close  approach  to  the  unsinkable  ship,  because  she  is 
subdivided  to  the  extent  that  she  could  have  four  of  her  com- 
partments open  to  the  sea  and  yet  float.  The  particular  advan- 
tage of  this  design  is  that  while  the  vessel  would  ordinarily  carry 
0,000  tons  on  27  feet  draft,  she  becomes  unsinkable  with  a  re- 
duction of  but  7.5  per  cent  in  her  carrying  capacity,  namely,  to 
8,330  tons  on  a  draft  of  25  feet,  G  inches.^ 

Another  English  ship  designer  has  aimed  to  add  security  by 
combining  many  compartments  with  the  placing  of  the  machin- 
ery far  aft.  This  presents  a  target  only  half  as  long  as  the  ordi- 
nary construction  which  puts  machinery  in  the  middle  of  the  ship 
with   long  shaft  back  to  the  propeller.     An   Italian   designer, 

'  Fairplay,  September  20,  1917,  p.  489. 


SHIPBUILDING    DURING    THE    WAR  229 

Pugliese,  adds  further  security  by  placing  three  separate  skins  or 
bulkheads  around  the  engine  and  coal  space. 

Early  in  the  war  the  English  experimented  on  some  Channel 
boats  by  filling  them  with  empty  casks,  which,  when  pressed  by 
the  rising  water,  burst  through  the  deck.  The  United  States 
Shipping  Board  experimented  with  the  Austrian  steamship  Lucia 
by  fastening  to  the  inside  of  her  hull  12,000  wooden  boxes, 
each  covered  with  thin  galvanized  sheets  of  steel.  This  unfor- 
tunately took  about  15  to  20  per  cent  of  her  freight  space,  and 
while  it  was  well  agreed  that  vessels  by  this  means  could  be 
made  to  float,  it  would  not  at  all  prevent  a  torpedo  from  wreck- 
ing her  to  the  extent  of  making  her  worthless,  so  that  she  might 
float  about  like  a  wrecked  lumber  schooner,  a  factor,  however, 
of  great  value  for  a  troop  transport.  Suggestions  almost  in- 
numerable have  been  made  to  the  Shipping  Board,  many  of 
which  have  been  tried  out,  and  most,  of  course,  refused,  but 
they  are  building  several  vessels  whose  plans  for  a  high  degree 
of  unsinkability  have  been  approved  by  naval  experts. 

New  Methods  of  Construction 
The  discovery  that  large  pieces  of  metal  could  be  fastened 
together  by  welding  with  the  electric  arc  rather  than  by  rivets 
is  a  process  which  came  in  time  to  be  of  great  value,  but  prob- 
ably came  too  late  to  give  us  sufficient  time  to  work  out  the 
technique  necessary  to  use  it  in  building  the  hull  of  a  ship  more 
economically  than  by  the  present  method  of  riveting  plates  to- 
gether. 

It  has  rendered  us  great  service  in  that  it  enabled  us  to  easily 
defeat  the  plan  of  Germany  to  wreck  the  German  steamers  in 
American  ports  so  we  could  not  repair  them  for  many  months. 
This  plan  was  to  break  parts  of  the  machinery,  selecting  such 
parts  as  would  require  almost  complete  tearing  out  and  recon- 
struction to  repair.  But  the  new  invention  permitted  us  to  weld 
them  in  place  and  in  a  surprisingly  short  time  the  ships  were 
loaded  with  American  troops  crossing  the  Atlantic.  The  last 
of  these  vessels  was  in  order  by  January,  1918. 


230  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

If  welding  used  the  ordinary  rolling  mill  plates,  it  would  be  of 
advantage  only  if  it  worked  faster  or  easier  than  riveting,  be- 
cause at  the  present  time  the  capacity  of  rolling  mills  of  the 
country  promises  to  be  absorbed  by  the  riveting  method.  There 
have  already  been  found  many  places  in  inside  work  where  the 
welding  method  is  more  efficient  than  the  old  way  and  it  is  being 
used. 

New   Materials 

(a)  Wooden  Ships 

The  rush  to  get  ships  of  any  sort  has  caused  a  temporary 
revival  of  the  wooden  shipbuilding  industry  of  the  United  States. 
Incidentally  it  also  cost  us  more  in  that  it  was  partly  the  innocent 
cause  of  the  paralyzing  controversy  between  Messrs.  Denman 
and  Goethals  as  to  what  kind  of  ships  we  should  build.  The 
wooden  ship,  however,  has  come  to  stay  during  the  present 
period  of  ship  famine  because  it  represents  an  added  material 
and  an  added  source  of  supply,  using  a  class  of  labor,  namely, 
carpenters,  unacquainted  with  metals  and  unfitted  for  building 
iron  ships,  and  a  material  whose  production  in  nowise  interferes 
with  the  maximum  production  of  steel.  Wooden  shipyards  have 
been  revived  from  picturesque  ruin  and  are  now  busy  on  every 
one  of  our  coasts, 

(b)    The  Composite  Ship 

In  the  early  months  of  the  shipping  famine  we  let  a  number 
of  contracts  for  what  were  called  composite  ships :  namely,  ves- 
sels with  steel  frames  and  wooden  sheathing.  These,  however, 
appeared  to  be  of  questionable  merit,  and  have  now  been  aban- 
doned because  they  cost  almost  as  much  as  steel  without  many 
of  its  advantages. 

(c)    The  Cement  Ship 

Here  is  a  great  hope,  certainly  the  greatest  hope  of  any  of 
the  new  things  that  lie  outside  the  old  established  wood  and  steel 


SHIPBUILDING    DURING    THE    WAR  231 

ship.  While  the  fabricated  standardized  steel  ship  will  undoubt- 
edly, when  once  our  plants  get  to  going,  be  built  more  rapidly 
than  ships  were  ever  built  before,  the  cement  ship  may  outstrip 
the  fabricators.  It  seems  almost  too  good  to  be  true.  If  we 
only  had  known  in  April,  1917,  what  we  can  easily  know  in 
April,  1920,  we  might  have  had  many  more  ships  afloat  by  this 
time.  There  is  no  reason  why  we  should  not  have  known  in 
1917  as  well  as  we  will  know  it  in  1920,  no  reason  except  the 
limitations  of  the  human  mind.  The  experience  with  the  con- 
crete ship  can  be  taken  as  reasonable  proof  that  man  after  all 
is  an  essentially  stupid  and  ineffective  rather  than  an  essentially 
intelligent  animal.  Cement  has  been  known  so  long  and  the 
history  of  cement  as  a  shipbuilding  material  is  so  old  that  it  is 
almost  unbelievable  that  we  should  have  known  so  little  about 
it  when  the  war  began.  Particularly  puzzling  is  the  case  of 
England,  a  nation  whose  life  absolutely  depended  upon  ships, 
and  a  nation  that  has  known  for  twenty  years  that  the  submarine 
was  more  than  a  dream.  Germany,  Holland,  France  and 
America  all  knew  more  about  the  cement  ship  than  did  England. 
In  fact,  she  never  built  one  for  years  after  other  nations  were 
experimenting  with  them.  Her  ignorance  in  this  direction  can 
only  be  understood  when  one  remembers  that  the  students  at 
the  universities  that  crown  her  educational  system  and  dominate 
her  intellectual  life  have  during  this  same  period  devoted  them- 
selves so  exclusively  to  the  classics  that  they  have  called  science 
"  the  stinks  "  because  of  the  well  known  odor  of  a  chemical 
laboratory.  This  name  for  science  in  English  universities  will 
not  survive  the  war. 

History  of  Concrete  as  Ship  Material. 

Although  the  greatest  development  has  taken  place  within  the 
past  year,  a  concrete  rowboat  was  built  and  patented  by  M.  Lam- 
bot  of  Carces,  France,  as  early  as  1849.  The  following  year  the 
invention  was  investigated  by  the  French  Government,  but  the 
development  was  left  to  private  initiative.  The  boat  was  ex- 
hibited at  the  Paris  exposition  held  in  1855, 


232  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

As  late  as  1903  this  same  rowboat  was  still  in  first  class  con- 
dition. Not  only  is  this  the  first  instance  on  record  of  the  use 
of  concrete  in  the  building  of  boats,  but  it  is  also  the  first  ex- 
ample of  the  use  of  reinforced  concrete. 

In  ISST  barges  of  from  11  to  55  tons  capacity  were  built  for 
use  on  the  inland  waters  of  Holland,  and  one  described  as 
a  sloop  named  de  Zccmcuv  has  been  constantly  in  service  since 
1887  and  is  reported  to  be  in  good  condition  although  she  "  has 
been  employed  in  the  winter  months  among  ice."  ^ 

In  1897  a  concrete  pontoon  67  feet  in  length  was  built  in 
Italy  for  use  on  inland  waters. 

A  vessel  of  schooner  rig  65  feet  in  length  was  built  in 
America  in  1892,  and  is  reported  to  have  worked  in  the 
coasting  trade  for  some  years  and  to  have  made  voyages 
as  far  north  as  Hudson's  Bay  and  as  far  south  as  Cape 
Hatteras.  On  one  occasion  she  struck  a  rock  off  Cape 
Charles,  but  was  undamaged.  In  the  owners'  opinion  a 
steel  vessel  under  the  same  circumstances  would  have  been 
lost.^ 

In  1905  concrete  barges  of  150  tons  capacity  were  built  by 
Carlo  Gabellini  in  Italy.  In  1906  a  barge,  constructed  by  him  for 
the  use  of  the  Italian  Navy  in  the  military  harbor  at  Spezzia, 
was  tested  before  acceptance  by  being  driven  against  some  pilings 
and  afterwards  rammed  by  a  steel  tow-boat.  The  results  of  these 
tests  were  so  favorable  that  the  construction  of  similar  barges 
followed.  Signor  Gabellini's  system  of  construction  was  sub- 
sequently adopted  in  other  countries. 

In  1909  a  220  ton  freighter  was  built  in  Germany  for  river 
traffic  and  in  1912  a  concrete  sailboat  was  built  in  the  same 
country.  In  the  construction  of  this  boat,  great  care  was  taken 
to  make  its  lines  conform  with  the  approved  sailboat  designs. 
For  obvious  reasons  the  present  condition  of  this  boat  can  not 
be  determined. 

'  Glasgow  Herald,  December  29,   1917,  p.  35. 


SHIPBUILDING    DURING    THE    WAR  233 

In  Great  Britain  the  first  ferro-concrete  vessel — a  barge — 
was  constructed  on  the  Thames  in  1910  by  the  Cubitt  Con- 
struction  Company/ 

In  1914  a  concrete  motor  boat  was  built  by  Walter  Dorsey 
of  Iron  River,  Michigan.  Dorsey  explains  the  building  of  his 
boat  by  saying  that  he  had  no  wood  or  steel.  For  a  keel  he  used 
a  T-bar  bent  upward  at  the  ends.  Twelve-gauge  by  1  inch 
fiat  steel  strips  were  used  for  ribs  placed  at  12  inch  intervals. 
Steel  strips  were  also  riveted  to  the  ribs  running  from  prow  to 
stern  at  12  inch  intervals.  A  Vi  inch  square  wire  mesh  was 
attached  to  the  framework.  The  cement  was  applied  to  this 
framework  by  means  of  a  trowel.  The  boat  when  completed  was 
18  feet  G  inches  in  length  with  a  4  feet  G  inch  beam,  %  inch  wall 
and  a  hull  38  inches  in  depth.  Motive  power  was  furnished  by  a 
six  horse-power  gasoline  motor.  Dorsey  named  his  boat  Concrete. 
Dorsey's  boat  has  now  been  taken  over  by  the  United  States 
Government  for  use  at  the  Naval  Reserve  Training  Station, 
Chicago,  Illinois.  The  experience  of  this  boat  with  the  jar- 
ring of  a  gasoline  motor  is  very  suggestive  of  success  on  a 
mooted  question — the  influence  of  the  engines  in  a  concrete 
ship. 

During  1915  and  1916  many  scows  and  barges  were  built  of 
concrete  in  the  United  States  for  use  on  the  lakes.  Concrete 
pontoons  125  feet  in  length  were  built  for  use  as  landing  stages 
for  small  craft  in  the  Panama  Canal  because  of  the  scarcity  of 
steel  and  wood  suitable  for  such  construction.  For  the  last  four 
years,  500  ton  lighters  made  of  concrete  have  been  in  use  on 
Chesapeake  Bay  to  convey  coal  and  water  to  the  dredges  and 
to  carry  sand  and  gravel. 

The  greatest  development  of  the  concrete  boat  occurred,  how- 
ever, in  1917.  In  the  Scandinavian  countries,  Norway  and  Den- 
mark in  particular,  100  to  200  ton  lighters  were  constructed  for 
river  and  coastwise  traffic.  Official  rules  have  been  laid  down 
in  Denmark  for  construction  of  ferro-concrete  boats.     In  Eng- 

'  Glasgow  Herald,  December  29,  1917,  p.  35. 


234  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

land  a  300  ton  concrete  motor  ship  was  built  for  coastwise  and 
channel  traffic.  To  Norway  belongs  the  credit  for  the  greatest 
development  of  the  use  of  concrete  shipbuilding.  The  leading 
company  of  that  country,  the  Fougner  Steel  Concrete  Ship- 
building Company  of  Moss,  Norway,  is  now  engaged  in  the 
building  of  200  to  3,000  ton  vessels  for  the  traffic  between  Nor- 
way and  England.  A  vessel  of  4,000  tons  was  reported  on  the 
ways  of  this  company  in  November,  1917.  The  same  company 
also  has  under  construction  a  large  tug-boat  and  a  reinforced 
concrete  lightship  for  the  Norwegian  Government.  This  light- 
ship is  to  be  stationed  in  the  stormy  sweep  of  the  Skager-Rak. 
The  first  ship  turned  out  by  the  company  to  be  given  any  ex- 
tended trial  was  the  Namscnfjord  a  vessel  of  400  tons  com- 
pleted late  in  1917.  In  January,  1918,  this  vessel  completed  a 
round  voyage  between  Norway  and  the  British  Isles,  steaming 
2,000  miles.  It  answered  every  test  satisfactorily,  and  has  been 
given  a  class  A-1  rating  by  Lloyd's.  The  Norwegian  Veritas 
has  placed  the  vessel  in  first  class  (experimental). 

Mr.  N.  Fougner  of  the  Fougner  Steel  Concrete  Shipbuilding 
Company,  of  Moss,  Norway,  on  a  recent  trip  to  the  United 
States  organized  the  Fougner  American  Steel  Concrete  Ship- 
building Company  of  New  York. 

In  Spain  at  the  present  time,  considerable  attention  is  being 
given  to  the  building  of  vessels  of  reinforced  concrete.  The 
Works  &  Pavements  Corporation  of  Barcelona  has  in  course  of 
construction  its  first  cargo  boat.  The  firm  plans  to  construct  in 
1918  a  gross  tonnage  of  40,000  tons  which  corresponds  to  a  dis- 
placement of  70,000  tons  consisting  of  standard  types  of  ships 
of  300,  500,  and  1,000  tons  each.  In  Germany  concrete  is  be- 
ing recognized  as  the  shipbuilding  material  of  the  future  as  shown 
by  the  following  quotation  from  Fairplay  for  January  10,  1918  : 

Ferro-concrete  is  evidently  coming  in  all  right  as  a  ship- 
building material.  Captain  Persius,  the  naval  expert  of  the 
Berliner  Tagehlatt,  says  that,  owing  to  the  prospective  short- 
age of  iron,  steel,  and  timber  for  shipbuilding,  after  the  war 
the  leading  German  and  Austrian  firms  are  preparing  to 


SHIPBUILDING    DURING    THE    WAR  235 

use  ferro-concrete  on  a  large  scale,  and  "  yards  are  now 
being  constructed  to  that  end."  In  his  opinion  all  the  great 
shipbuilding  countries  will  have  to  adopt  a  similar  policy 
and  find  substitutes  for  iron,  steel,  and  wood. 

Later  newspaper  reports  through  Holland  indicate  the  actual 
building  of  800  ton  concrete  motor  ships  by  the  Germans. 

The  largest  concrete  ship  ever  built  is  the  Faith,  launched  on 
March  14,  1918,  at  Redwood  City,  California,  by  the  San  Fran- 
cisco Shipbuilding  Company.  It  is  ten  times  larger  than  any 
concrete  vessel  on  record  in  the  United  States.  The  vessel  is 
320  feet  long,  A^V-z  feet  wide,  30  feet  deep  and  draws  when 
loaded  24  feet.  The  floor  has  a  thickness  of  4^/4  inches  and  the 
walls  4  inches.  She  weighs  600  tons  more  than  a  steel  vessel  of 
similar  capacity.  The  six  bulkheads  and  the  deck  are  also  made 
of  concrete.  The  bottom  of  the  vessel  is  covered  with  a  wooden 
water-tight  floor.^  Displacement  is  7,900  tons,  carrying  ca- 
pacity 5,000  tons.  540  tons  of  steel  reinforcing  in  the  form  of 
bars  and  a  basket  work  of  steel  mesh  were  used.  The  bars  were 
welded  together,  thus  reducing  to  a  minimum  the  quantity  of 
steel  required  by  avoiding  laps  that  otherwise  would  have  been 
necessary.  The  engines  are  oil  burners  of  1,750  horse-power. 
The  speed  of  the  vessel  is  10  to  11  knots,  160  barrels  of  oil  per 
day  being  consumed.  In  the  designing  of  the  vessel  no  provision 
was  made  for  water  ballast,  as  the  designers  believed  that  the 
heavy  concrete  floor  would  make  the  vessel  ride  evenly.  The 
vessel  was  launched  on  March  14,  exactly  as  previously  an- 
nounced, and  just  six  weeks  after  the  concrete  was  poured.  She 
was  fully  equipped  by  May  1,  passed  her  trial  trips  satisfactorily 
and  went  to  work  early  in  May.  The  cost  of  the  vessel  was 
$750,000,  a  large  part  of  which  is  due  to  the  fact  that  it  was  a 
first  attempt. 

Concrete  for  the  vessel  was  mixed  just  the  same  as  building 
contractors  mix  it  for  a  building.  The  only  difference  being 
the  amount  of  cement  used  and  the  size  of  the  gravel  stones. 

'  Philadelphia  Public  Ledger,  March  15,  1918. 


236  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Smaller  gravel  and  more  cement  was  the  rule   governing  the 
mixing  of  material  on  the  Faith. 

Methods  of  Building  Concrete  Ships. 

There  are  several  methods  in  use  at  the  present  time  for 
the  building  of  concrete  ships  which  can,  however,  be  divided 
into  two  general  groups.  The  first  method  consists  in  building 
forms  much  the  same  as  is  done  in  the  construction  of  buildings. 
Concrete  is  poured  into  the  forms.  Several  modifications  of  this 
scheme  have  been  perfected.  Internal  forms  are  built  which 
can  be  removed  after  the  vessel  has  been  launched.  Sometimes, 
the  external  forms  are  built  in  sections  in  such  a  way  that  they 
can  be  moved  along  the  ship's  side  as  the  construction  progresses. 
The  methods  coming  under  the  second  group  follow  very  closely 
the  method  invented  by  Carl  Weber  of  910  South  Michigan 
Avenue,  Chicago,  a  well  known  engineer  of  the  Cement  Gun 
Construction  Company  of  Chicago.  The  method  proposed  by 
Mr.  Weber  consists  mainly  of : 

a.  A  skeleton  of  structural  steel  with  members  running 
transversely  and  longitudinally  throughout  the  hull. 

h.  A  system  of  reinforcing  steel  rods  supported  by  the  con- 
struction. 

c.  A  layer  of  wire  mesh  or  fabric  placed  outside  of  the 
steel  rods. 

d.  A  concrete  shell  in  which  the  reinforcement  is  imbedded. 
Concrete  is  applied  by  means  of  air  pressure  in  a  modi- 
fied cement  gun,  directly  to  the  assembled  steel  frame 
work,  no  forms  being  required  other  than  a  sort  of 
shield  held  on  the  side  opposite  the  cement  gun  and 
directly  at  the  point  of  application.  When  concreting 
has  been  completed  and  concrete  has  hardened,  the  ex- 
posed surface  is  rubbed  down  to  a  fine  smooth  finish  by 
rotary  grinding  machines. 

The  method  of  construction  used  at  the  Fougner  yards   in 
Moss,  Norway,  is  similar  to  the  Weber  method,  although  no 


SHIPBUILDING    DURING    THE    WAR  237 

Structural  steel  is  used.  Metal  lath  is  formed  into  a  double 
wall  and  concrete  is  poured  between.  Some  of  the  concrete 
works  out  through  the  perforations  and  takes  the  shape  of  knobs 
upon  the  two  outer  surfaces.  These  knobs  form  in  turn  the 
anchorage  upon  which  the  coating  of  the  inside  and  outside  of  the 
vessel  are  laid.  The  steel  bars  for  reinforcing  are  set  in  place 
between  the  two  walls  of  metal  lath  before  concrete  is  poured. 
The  outer  surface  of  the  hull  is  finished  by  hand,  although  the 
cement  gun  may  be  used  to  apply  bulk  of  surface  coating.^ 

In  Norway  the  work  is  mostly  carried  on  in  closed-in 
sheds,  slightly  heated,  which  provide  additional  advantages 
in  keeping  off  rain  from  the  structure  in  wet  weather,  and 
also  in  keeping  off  the  sun,  which  by  its  heat  may  cause 
cracking  of  the  concrete  in  setting." 

In  warmer  climates  such  structures  are  unnecessary. 

Launching  the  Concrete  Ship. 

Smaller  vessels  are  built  and  launched  upside  down.  This  is 
done  because  internal  forms  can  be  used  and  the  concrete  applied 
more  evenly  than  would  otherwise  be  possible.  When  the  ves- 
sel strikes  the  water,  water  is  admitted  to  compartments  causing 
the  vessel  to  right  itself.  In  the  case  of  the  200  ton  lighter 
launched  in  Norway  in  August  of  1917  between  15  and  20 
minutes  were  required  for  the  vessel  to  right  itself.  Larger 
vessels  are  built  and  launched  much  the  same  as  steel  vessels. 
The  concrete  ship,  Faith,  was  launched  broadside. 

The  Advantages  of  Concrete  in  Shipbuilding. 

(a)  It  does  not  interfere  with  steel  construction.  Only 
the  steel  rods  and  steel  wire  mesh  are  necessary,  and 
rolling  mill  capacity  is  not  required. 

(b)  Materials  needed  for  the  mixing  of  concrete — cement, 

'  Scientific  American,  November  17,  1917. 
■  Glasgow  Herald,  December  29,  1917,  p.  35. 


238  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

gravel,  and  sand — are  at  the  present  time  compar- 
atively plentiful  with  unlimited  resources.  The  pro- 
duction of  cement  increased  in  1917. 

(c)  A  concrete  vessel  can  be  built  for  the  present  cost  of 
a  wooden  vessel.  During  the  summer  of  1917  a 
joint  committee  of  the  American  Concrete  Institute 
and  the  Portland  Cement  Association  submitted  a 
design  for  a  2,000  ton  seagoing  barge.  The  cost  per 
ton  dead-weight  of  this  barge  was  estimated  at  $63. 
The  best  available  figures  as  to  cost  of  a  steel  hull  of 
the  same  character  were  from  $90  to  $120  per  ton 
and  the  cost  of  a  wood  hull  $70  to  $100  per  ton.  In 
The  Scientific  American  for  November  17,  1917,  it 
was  stated  that  a  concrete  vessel  could  be  built  for 
$750,000  as  against  $2,000,000  for  the  ordinary  steel 
ships  of  the  same  size.  The  Shipping  Board  estimates 
that  a  concrete  hull  can  be  built  for  from  $10  to 
$70  a  ton  cheaper  than  either  wood  or  steel.  The  cost 
of  engines  and  boilers  would  be  the  same  for  all 
classes. 

{d)  A  concrete  vessel  can  be  built  more  quickly  than  a 
steel  vessel  or  a  wood  vessel  of  the  same  capacity.  It 
is  estimated  that  a  7,500  ton  vessel  can  be  completed 
in  90  days. 

(e)  For  the  construction  of  concrete  ships  a  much  cheaper 
plant  is  required,  the  cost  probably  being  about  one- 
twentieth  of  the  cost  of  the  steel  ship  plant  or  $25,- 
000  as  compared  with  $500,000. 

(/)  Unskilled  workmen  can  be  used.  It  is,  of  course, 
necessary  to  have  skilled  workmen  for  the  direction 
of  construction,  but  fewer  are  needed  than  in  the 
case  of  a  steel  ship. 

(g)  The  concrete  ship  is  fire-proof,  rat-proof,  rot-proof, 
and  insect-proof. 

(h)  The  cost  of  up-keep  is  very  low,  and  repairs  can  be 
made  easily. 


SHIPBUILDING    DURING    THE    WAR  239 

(i)  A  smooth  finish  can  be  given  to  the  concrete  ship  which 
reduces  friction  in  the  water  to  a  minimum.  The 
smooth  surface  also  prevents  the  accumulation  of 
barnacles  and  other  sea  growths — a  constant  element 
of  cost  in  wood  and  metal  ships. 

(;")  The  concrete  ship  is  durable:  witness  the  case  of  the 
French  rowboat  constructed  in  1849. 

"  It  is  claimed  that  damages  to  concrete  vessels  are 
easily  made  good,  as  it  only  means  increasing  the  rein- 
forcements in  the  way  of  the  damages  so  as  to  obtain 
a  higher  strength  than  the  original.  For  the  same  area 
repairs  will  be  much  less  costly  in  the  ferro-concrete 
ship  than  in  a  steel  vessel."  ^ 

A  German  ferro-concrete  barge  survived  collision 
with  a  Rhine  steamer.^  Note  the  harmless  stranding  of 
the  American  schooner  above  mentioned. 
(k)  Superior  resistance  to  torpedoes.  This  is  flouted  by 
some,  but  claimed  by  Hiram  Maxim  and  explained  as 
follows : 

Owing  to  the  toughness  of  the  steel  ship,  the  metal 
bends,  holds  together  as  long  as  possible,  and  trans- 
mits the  force  of  the  shock  for  great  distances  through 
the  structure  of  the  ship,  thus  making  extensive  dam- 
ages. In  contrast  to  this  the  concrete  pulverizes,  so 
that  the  torpedo  spends  its  energy  in  grinding  up  a 
small  area  of  concrete  rather  than  in  tearing  a  large 
hole  as  in  the  steel  structure.  The  pulverized  ma- 
terial is  also  heated  by  the  torpedo,  thus  utilizing 
energy  which  would  otherwise  destroy. 

The  Disadvantages  of  Concrete  in  Shipbuilding. 

{a)  The  disadvantages  of  the  concrete  ship  center  chiefly 
around  points  regarding  which  little  or  no  informa- 
tion is  available.  Little  is  known  concerning  the 
effect  of  the  sea  waves  and  engine  vibration  upon  the 

*  Glasgow  Herald,  December  29,  1917,  p.  35. 


240  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

hull.  Smaller  vessels  as  in  the  case  of  the 
Namsenfjord,  however,  have  been  used  successfully. 
Action  of  waves  and  engine  vibrations  on  the  larger 
vessels  such  as  the  Faith  can  only  be  ascertained 
through  actual  experience,  which  fortunately  we  are 
now  getting. 
(6)  It  is  also  feared  that  salt  water  will  have  a  deterio- 
rating efifect  upon  the  concrete,  but  it  is  peculiar  if 
20  years  of  experience  have  left  much  need  for  ex- 
periment in  that  field.  If  salt  water  is  a  menace,  it 
is  possible  to  protect  the  hull  by  means  of  water- 
proof paint,  or  a  water-proofing  material  may  be 
mixed  with  the  concrete.  The  deterioration  is  caused 
by  action  of  various  ingredients  of  salt  water  such  as 
magnesium  sulphate  upon  free  lime  in  concrete.  Cer- 
tain varieties  of  concrete  such  as  "  puzzolane  "  con- 
tain no  free  lime,  and  if  very  dense  concrete  is  used 
it  is  not  materially  penetrated.  The  chief  preven- 
tions against  sea  water  are : 

(1)  Use  of  rich  concrete. 

(2)  Use  of  cement  containing  but  little  free  lime, 

gypsum  and  alumina. 

(3)  Addition  of  puzzolane  containing  silicic  acid 

to  fix  free  lime. 

(4)  Use  of  coarse  sand. 

(5)  Use  of  dense  concrete. 

(6)  Special  surface  treatment. 

(7)  Protection  of  reinforcing  against  oxidation.^ 
This  is  probably  the  most  menacing  of  all  the 

troubles;  much  reinforced  concrete  exposed 
to  sea  water  has  gone  to  pieces  because  the 
salt  penetrated  the  cement,  rusted  the  iron, 
which  makes  it  expand  and  burst  the  con- 
crete. The  engineers  should  be  able  to  get 
defense   against   this  by  one  or  all   of   the 

'  Scientific  Arnerican,  July  28,  1917. 


SHIPBUILDING    DURING    THE    WAR 


241 


three  methods — painting  the  iron,  water- 
proofing the  concrete  or  its  surface.  The 
Schoop  metal  spray  is  one  of  several  re- 
cent inventions  that  may  be  important  in 
this  work. 

(c)  The  same  objection  has  been  made  against  the  con- 

crete ship  that  we  made  against  the  steel  ship  when 
vessels  were  first  built  from  that  material:  namely, 
that  it  is  too  heavy,  but  a  concrete  vessel  of  5,000 
tons  capacity  weighs  but  600  tons  dead-weight  more 
•    than  a  steel  vessel  of  the  same  capacity. 

(d)  Concrete  is  not  flexible.  In  answer  to  this  disad- 
vantage, engineers  claim  that  concrete  is  flexible,  and 
in  fact  advance  this  argument  as  one  of  the  points  in 
favor  of  concrete  construction. 

(e)  It  has  been  shown  in  the  past  that  concrete  vessels 
are  unable  to  withstand  chafing  against  other  vessels 
or  against  a  dock.  It  is  also  possible  to  protect  the  hull 
by  means  of  wooden  fenders. 

It  is  a  sad  commentary  on  the  ineptitude  of  man  that  we  know 
so  little  about  cement  as  a  ship  material  after  we  have  had  so 
much  time  in  which  we  might  have  learned. 

Lloyd's  Approval  of  Concrcts  Ships. 

Lloyd's  Register  of  Shipping  has  approved  plans  for  the  con- 
struction of  several  reinforced  concrete  ships  with  a  view  to 
classification  by  the  society.  As  mentioned  before,  they  have 
also  given  an  A-1  rating  to  the  Namsenfjord.  This  approval 
by  so  conservative  and  authoritative  a  body  should  be  given  great 
weight.  Concrete  vessels  were  building  on  the  west  coast  of 
Scotland  in  January,  1918. 

Present  Concrete  Ship  Program 

The  use  of  concrete  in  shipbuilding  was  brought  to  the  atten- 
tion of  the  Senate  Commerce  Committee  on  January  29,  191S, 
by  Ray  Robinson  of  Chicago.     The  committee  recommended 


242  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

immediately  to  the  Shipping  Board  that  the  use  of  concrete  in 
shipbuilding  be  investigated.  On  February  2  the  Board  let  con- 
tracts for  ten  3,500  ton  vessels  to  the  Ferro-Concrete  Shipbuild- 
ing Company  of  Redonda  Beach,  California.  The  company 
claims  that  it  will  use  a  newly  patented  scheme  of  construction. 
The  San  Francisco  Shipbuilding  Company,  the  builders  of  the 
Faith,  have  plans  to  build  54  ships,  some  of  much  larger 
capacity. 

Contracts  for  forty-nine  of  these  vessels  were  let  about  the 
time  the  Faith  sailed. 

The  success  of  this  ship  resulted  in  the  announcement,  May 
1,  1918,  by  the  Cleveland  Builders  Supply  Co.,  that  it  proposed 
to  establish  on  the  shores  of  Lake  Erie  (Cleveland)  a  yard  for 
the  construction  of  concrete  vessels,  the  ships  to  be  for  lake  and 
canal  trade,  thus  releasing  lake  vessels  for  sea  service.  They 
are  to  build  four  vessels  at  a  time  of  1,000  to  2,000  tons  ca- 
pacity, steam,  propelled. 

It  seems  reasonably  certain  at  this  time,  May  30,  1918,  that 
the  latest  word  from  the  cement  ships  is  one  of  success,  and 
during  this  calendar  year  we  shall  know  how  much  we  can  depend 
upon  them.  At  present  it  seems  quite  likely  that,  if  this  suc- 
cess continues,  we  shall  be  in  a  position  by  the  end  of  summer 
or  certainly  before  the  beginning  of  winter  to  start  concrete  ship- 
yards by  the  dozen  on  the  estuaries  of  the  South  Atlantic  and 
Gulf  States  and  the  California  coast  where  they  can  work  unin- 
terruptedly through  the  winter  with  little  or  no  protection,  and 
turn  out  hulls  by  the  score  or  hundred.^  It  is  possible  also  that 
we  shall  develop,  as  has  been  suggested,  interchangeable  parts  of 
the  ship  itself  to  the  extent  of  making  detachable  engines  which 
can  in  five  minutes  time  be  uncoupled,  lifted  out  of  one  concrete 
hull  as  she  lies  at  her  pier,  and  dropped  into  one  of  her  hundred 
sisters  that  happens  to  be  alongside,  thus  permitting  one  engine 

'  On  May  25  a  board  of  engineering  experts  recommended  to  the  United 
States  Shipping  Board  the  building  of  five  government  yards  for  building 
concrete  ships,  and  it  is  understood  that  the  locations  were  to  be  Wilmington, 
N.  C,  Jacksonville,  Fla.,  Mobile,  Ala.,  San  Francisco  and  San  Diego,  Cahf.', 
all  of  them  locations  permitting  virtually  continuous  work  throughout  the 
winter. 


SHIPBUILDING   DURING    THE    WAR  243 

to  run  at  least  two  ships  on  the  North  Atlantic  Ferry.  Such 
plans,  if  proved  by  September  1,  1918,  by  the  experience  of  the 
good  ship  Faith  and  other  cement  vessels,  might  enable  the  cement 
ship  to  be  of  material  aid  in  feeding  Europe  during  the  hungry 
time  of  May,  June  and  July  just  preceding  the  European  harvest 
of  1919,  which  will  be  a  hungry  time  alike  in  peace  or  war,  and 
to  finally  be  the  deciding  factor  in  restoring  tonnage  despite  the 
submarine. 


CHAPTER  IX 

Shipbuilding  in  the  United  Kingdom 

A  Problem  in  Business  Administration  and  Government 

Control 

British  shipbuilding  during  the  first  three  and  a  half  years  of 
war  offers  an  interesting  study  in  industrial  management.  It  is 
a  story  of  struggle  for  efficiency  through  the  reorganizing  and 
nationalizing  of  an  industry  embarrassed  by  war  but  thoroughly 
set  in  its  ways,  satisfied  with  itself,  operated  by  a  labor  supply 
highly  organized  and  deeply  intrenched  by  a  host  of  restrictive 
and  protective  rules,  and  further  backed  up  by  a  very  strong 
political  influence.  Nevertheless  it  has  been  almost  revolution- 
ized, as  was  indicated  by  the  discussion  of  standardization  in  the 
last  chapter. 

The  Government  Commandeers  Yards  and  Dictates 

Output 

When  rising  freights  sent  the  British  owner  scurrying  to  the 
shipyard  gate  in  the  autumn  of  1914  he  found  it  closed,  or  he 
found  himself  ejected  even  if  he  had  the  luck  to  get  inside.  The 
yards  were  commandeered.  The  British  Government,  accepting 
the  idea  of  a  long  war  and  realizing  anew  the  necessity  of  a  great 
war  fleet,  commandeered  nearly  all  the  shipyards  of  Great  Brit- 
ain, put  them  at  all  kinds  of  naval  work  from  superdreadnoughts 
to  submarines  and  mosquito  boat  submarine  chasers.  Extensive 
contracts  for  these  last  were  also  let  in  the  United  States.  This 
meant  that  merchant  shipbuilding  was  brought  almost  to  a  stand- 
still, and  continued  so  for  many  months,  unfinished  vessels  being 
left  as  they  were  when  the  men  moved  over  to  the  war  work. 

Many  scores  of  merchants  ships  are  lying  on  the  stocks  un- 
finished, and  as  many  more  on  builders'  books  have  not  been 

244 


SHIPBUILDING    IN    THE    UNITED    KINGDOM  245 

commenced.  All  this  work,  indefinitely  hung  up  by  the  war, 
will  have  to  be  completed  when  circumstances  will  allow; 
and  when  that  will  be  no  one  as  yet  has  any  clear 
idea.^ 

The'  Clyde  Armaments  Committee  even  proposed  -  to  close 
down  five  Clyde  yards  that  were  not  working  on  government  con- 
tracts so  that  the  men  could  go  to  government  work  in  other 
yards — with  compensation  to  the  closed  yards. 

By  October,  1915,^  there  were  some  signs  that  the  official  mind 
was  beginning  to  get  interested  in  merchant  shipbuilding.  High 
freight  rates  had  become  appalling,  and  the  lack  of  naval  battles 
and  the  increasing  loss  by  submarines  were  beginning  to  show  the 
pressing  need  was  for  freight  carriers  rather  than  war  vessels. 
In  December,  1915,  builders  in  the  Newcastle  district  were  given 
permission  by  the  Admiralty  to  proceed,  with  mercantile  work 
that  they  had  in  hand  whenever  the  government  work  they  had 
on  the  stocks  would  allow  them  to  do  so.* 

The  importance  of  this  permission  is  well  illustrated  by  the 
case  of  a  freighter  '"  which  had  already  been  lying  three  months 
at  the  engine  firm's  docks  waiting  for  two  weeks'  work  in  com- 
pleting her  engines,  and  giving  to  her  prospective  owner  the 
anguish  of  huge  missed  earnings,  of  which,  however,  12s. 
6d.  in  the  pound  would  have  gone  to  the  state.  By  the  middle 
of  March,  1916, '^  the  government  had  become  increasingly 
interested  in  merchant  shipping,  and  issued  further  permission  to 
builders  to  complete  merchant  vessels  already  on  the   stocks.^ 

'  Lloxd's  Weeklv.  July  16,  1915,  p.  459. 

'Ibid.,  May  21/1915. 

'Ibid.,  December  22,  1915. 

■*  "  As  berths  become  vacan-c,  builders  will  presumably  be  able  to  lay  down 
the  keels  of  additional  merchant  ships,  either  in  execution  of  old  orders  or 
such  contracts  as  they  may  now  book. 

This  break  in  an  arrangement  which  has  tied  many  of  the  yards  down  for 
many  months  will  be  very  welcome  to  shipowners  who  may  begin  to  calcu- 
late when  they  may  expect  delivery  of  the  vessels  for  which  they  have  been 
so  long  waiting."     Lloyd's  IVecklv,  December  17,  1915,  pp.  8,  11. 

=  Ibid.,  January  28,  1916. 

'Ibid.,  March   17,  1916. 

^  Late  in  February,  1916,  Walter  Runciman  speaking  for  the  government 
in  the  House  of  Commons  said,  "  An  increase  in  the  mercantile  marine  is 
just  as  necessary  as  the  increase  of  numbers  of  warships."     (Fairplay,  Feb- 


246 


INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 


Efforts  were  made  to  clear  the  berths  of  war  vessels.  Then  the 
real  difficulty  of  the  situation  began  to  show  itself.  There  began 
to  be  vacant  berths  and  neither  men  nor  materials  available  to 
lay  down  more  shipping,  and  stagnation  in  merchant  building 
therefore  continued.^ 

The  process  of  transference  to  merchant  work  went  on  steadily 
through  the  year  1916.  By  the  middle  of  July-  in  one  district 
all  shipyards  with  two  exceptions  received  official  notification  that 
if  they  had  completed  current  Admiralty  contracts,  their  forces 
would  not  be  required  for  further  government  work  and  they 
would  be  free  to  devote  themselves  solely  to  mercantile  orders. 
On  the  other  hand  the  two  excepted  establishments  were  to  be 
retained  for  war  work,  showing  a  wise  policy  of  definite  speciali- 
zation in  work  of  different  yards — a  tendency  of  the  times  that 
the  war  has  emphasized  in  British  shipyards. 

The  output  of  merchant  shipping  for  the  years  1913  to  1917 
shows  ^  the  extent  to  which  this  industry  has  been  submerged  by 
f^e  necessities  of  war. 


No. 

Tonnage 

I.H.P. 

1913 

1424 

1,977,600  gross 

1,556,600 

1914 

1294 

1,722,150 

1,366,900 

1915  

517 

649,340 

540,600 

1916  

412 

582,300 

410,280 

1917  

1,163,474 

If  shipowners  could  have  got  all  the  ships  they  wanted,  Eng- 
land would  have  built  ten  or  fifteen  million  tons  in  1915  and  again 
in  1916.  As  it  was,  the  figures  of  output  were  so  far  below  the 
submarine  sinkings  that  the  year  and  a  half  from  the  middle  of 
July,  1916,  to  January,  1918,  marked  a  period  of  feverish  at- 
tempts to  bring  about  organization  and  efficiency,  so  that  by  read- 
justment a  nation  with  reduced  labor  and  reduced  materials 
might  maintain  a  navy  and  restore  a  mercantile  marine.     What 

ruary  24,  1916,  p.  321.)  He  further  stated  that  less  necessary  war  work  had 
been  allowed  to  stand  aside. 

As  late  as  the  spring  of  1918  there  were  still  at  least  two  uncompleted 
merchant  ships  that  had  been  started  before  the  war  began. 

'  Lloyd's    Weekly,    February    10,    1916. 

"-  Ihid.,  July  21,  1916,  p.  11. 

'  Ibid.,  May  4,  1917,  p.  8. 


SHIPBUILDING    IN    THE    UNITED    KINGDOM  247 

could  be  done?  First  of  all,  labor  had  to  be  reckoned  with, 
for  a  ship  runs  back  in  a  hundred  directions  to  labor,  to  man 
power. 

The  Labor  Question 

In  the  matter  of  labor  three  entirely  different  problems  pre- 
sented themselves:  (a)  The  diplomatic  and  political  task  of 
utilizing-  and  changing  the  unions  so  that  labor  might  be  had 
willing  to  be  used  to  the  best  efficiency,  for  the  greatest  output 
rather  than  for  merely  the  greatest  wage,  (b)  The  getting  of 
more  workers,  (c)  The  scientific  utilization  of  this  labor  to  make 
the  greatest  national  output  rather  than  the  greatest  gain  for  the 
individual  employers.  In  brief,  apply  scientific  management 
and  get  labor  and  capital  alike  to  stop  profiteering. 

Getting  the  Unions  to  Unbend 

From  the  standpoint  of  maximum  output,  English  labor  unfor- 
tunately was  thoroughly  organized  and  committed  to  the  suc- 
cessful policy  of  limitation  of  output — that  curse  of  modern  so- 
ciety, that  pet  device  alike  of  capital,  of  labor  and  of  trade,  in 
fact  an  instinctive  desire  of  all  of  us,  which  seeks  by  reduction 
of  output  to  enrich  itself  by  creating  scarcity  and  high  price  and 
thus  taking  profit  through  the  impoverishing  of  society.  The 
British  capitalistic  classes  had  grumbled  helplessly  at  this  labor 
tmion  policy  for  many  years,  but  now  it  became  a  vital  question 
and  under  the  pressure  of  national  necessity,  the  urge  of  pa- 
triotism, the  menace  of  a  foreign  enemy,^  British  labor  in  the 
munitions  industries,  made  a  bargain  early  in  1915  with  the 
government,  by  which  labor  promised  to  stop  limiting  output. 

'  The  problem  and  the  thoroughly  British  policy  are  well  stated  in  an 
editorial  in  Fairplay,  November  16,  1916,  p.  706. 

"  We  also  know  that  there  are  not  enough  men  for  shipbuilding  and 
engineering  and  munitions  manufacture,  and  also  for  the  army.  On  a  mere 
counting  of  heads  we  can  not  take  men  from  industry  without  weakening 
industry,  and  we  can  not  keep,  or  take,  men  from  the  army  without  weaken- 
ing the  army.  So  we  must  shuffle  labor  and  dilute  it,  and  coax  and  push 
into  industry  people  who  have  been  outside  its  ranks  hitherto,  and  pay  high 
wages,  and  work  lots  of  overtime,  and  adopt  every  other  expedient  we  can 
think  of.  In  this  matter  there  is  only  one  policy,  that  of  never-ending 
compromise." 


248  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

The  government's  agreement  with  the  trade  unions  regard- 
ing the  conditions  which  are  to  govern  labor  during  the 
period  of  the  war  in  the  production  of  munitions  is  so  good 
a  bargain  from  the  men's  point  of  view  that  it  is  difficuh 
to  beheve  in  the  sincerity  of  the  exceptions  which  are  being 
taken  to  it.  It  is  agreed  by  the  unions  that  while  the  present 
demand  for  munitions  lasts  there  shall  be  no  impediment  to 
the  employment  on  suitable  machines  of  zvomen  or  semi- 
skilled men.  For  its  part  the  government  undertakes  that 
there  shall  be  complete  reversion  to  the  status  quo  when  the 
hostilities  cease} 

Fortunately  this  mental  evolution  on  the  part  of  munition 
workers  was  in  the  process  of  time  duplicated  in  the  shipbuilding 
field.  The  process  was  slow  and  gradual.  In  September,  1915, 
Lloyd's  Weekly  (September  15)  reported  the  men  working 
"  well,  never  so  well."  But  a  month  later,  it '  reported  that  as 
the  process  of  transference  of  labor  from  war  work  to  merchant 
work  was  beginning,  men  refused  to  be  transferred,  although  the 
wages  were  as  good  and  better.  They  regarded  building  a  war- 
ship as  a  patriotic  enterprise,  but  they  did  not  care  to  "  enrich 
grasping  shipowners,"  so  in  some  cases  they  refused  to  build 
merchant  ships. ^ 

This  is  one  of  many  evidences  of  the  strong  opposition  of  the 
British  public  to  the  shipowner  and  his  profits.  Prices  were  up, 
the  newspapers  were  full  of  stories  of  enormous  freight  rates  and 
great  shipping  profits,  and  it  was  but  natural  that  the  average 
person,   particularly  among  an   island  population   whose   living 

'Lloyd's  Weekly,  "March  26,  1915,  p.  207. 

Students  of  sociology,  economics  and  labor  should  look  forward  with 
great  interest  to  the  workings  out  of  this  bargain,  this  permission  to  revert 
to  the  poHcy  of  impoverishment  at  the  end  of  the  war — that  policy  which  we 
all  see  to  be  erroneous  in  general  and  all  want  to  practice  in  our  own  par- 
ticular cases. 

"-  Lloyd's  lVeekly,_  October  15,  1915,  p.  667. 

^  Before  general  increases  in  merchant  shipbuilding  wages  came  there  was 
also  a  lot  of  haggling  over  the  fact  that  men  did  not  desire  to  return  to 
merchant  shipbuilding  because  the  government  in  nearly  all  cases  paid  27^/^ 
per  cent  extra  wage  for  warship  work  on  the  assumption  that  it  was  heavier 
work.  At  the  end  of  December,  1915,  a  munitions  tribunal  at  Edinburgh 
fined  59  men  20  shillings  each  under  the  Munitions  of  War  Act  for  absenting 
themselves  from  a  Grangemouth  shipyard  which  was  a  "controlled"  (com- 
mandeered) establishment.     Fairplay,  January  6,  1916,  p.  25. 


SHIPBUILDING    IN    THE    UNITED    KINGDOM  249 

came  from  ships,  should  conclude  that  these  profits  were  respon- 
sible for  his  high  prices,  especially  in  food. 

There  were  frequently  small  labor  difficulties  and  dissatisfac- 
tions during  1915  and  early  in  1916.  Upon  the  whole,  labor 
proved  itself  amenable  to  instruction  to  a  considerable  extent. 
The  fact  that  it  was  so  thoroughly  organized  enabled  it  to  be 
dealt  with  definitely  as  a  mass,  a  fact  not  appreciated  in  the 
United  States.  For  example,  delegations  of  munition  workers, 
union  officials,  waited  upon  Lord  Kitchener,  were  told  the  facts, 
went  back  to  their  men,  and  straightened  them  out  on  the 
matter  of  living  up  to  the  munitions  agreement.^ 

Union  rules  were  relaxed.  The  stringency  of  the  union  re- 
strictions against  apprentices  and  other  unskilled  workers  was 
relaxed,  and  particularly  the  stringent  rules  whereby  each  par- 
ticular worker  must  stick  to  his  particular  branch  of  the  trade, 
were  lessened  under  the  ever  increasing  pressure  of  national 
necessity.^ 

The  labor  union  restrictions  against  machines  were  waived,  to 
the  great  benefit  of  the  output.  The  extent  to  which  this  flat 
reduction  of  output,  namely,  the  refusal  to  use  efficient  machines 
and  tools, ^  has  been  insisted  on  by  organized  British  labor,  is 
hard  for  Americans  to  understand. 

The  labor  policy  at  this  time,  1916,  was  a  combination  of 
diplomacy  and  authority,  for  an  October  strike  in  Glasgow  was 
by  royal  proclamation  ordered  settled  by  compulsory  arbitration 
under  the  Defense  of  the  Realm  Act. 

Getting  More  Workers 

The  relaxation  of  union  rules  aided  greatly  in  the  getting  of 
more  workers.     By  June,  1916,  it  had  been  discovered  on  the 

'  Lloyd's  IVeeklv.  April  16,  1915,  p.  255. 

=  Liverpool  unions  succeeded  shortly  before  the  war  m  hinitmg  at  a  low 
figure  the  number  that  the  oxyacetylene  blow  pipes  should  bear  to  the  total 
number  of  men  on  the  job.  By  this  means  they  would  have  to  use  slow 
old  methods  rather  than  this  wonderful  steel  cuttmg  device.  Thus  they  mul- 
tiplied jobs.     Llovd's  Weekly,  July,  1914. 

Mn  some  British  shipbuilding  districts  it  is  reported  that  che  men  made 
no  concession  on  this  point. 


250  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Clyde  ^  that  women  could  do  a  surprising  number  of  processes 
in  shipbuilding  work  for  which  they  had  never  before  been  con- 
sidered, not  only  working  in  machine  shops,  inside  the  ships, 
but  even  out  in  the  yards  in  the  rougher  work.  As  an  example 
of  woman's  efficiency  in  this  work,  it  had  been  found  that  not 
only  could  she  run  many  machines  quite  as  well  as  a  man,  but 
a  good  many  vessels  have  had  all  the  electric  wiring  done  by 
women.  But  it  is  in  the  engine  building,  in  the  machine  shop, 
that  she  has  done  her  greatest  work. 

During  the  summer  of  1916  the  government  applied  to  ship- 
building the  policy  previously  applied  to  munitions,  that  of  bring- 
ing back  skilled  workers  from  the  front  whither  they  had 
gone  by  thousands  after  enlisting.  The  Shipbuilder  (September, 
1916)  heralds  the  return  to  the  yards  of  "many  of  the  large 
number  who  enlisted."  It  also  heralds  the  further  increase  of 
the  force  by  the  constant  dilution  with  unskilled  labor,  including 
women. 

Rearranging  Labor  for  National  Rather  than  Private  Gain 

In  the  autumn  of  1916  the  shipbuilding  practices  received  a 
shakeup,  for,  through  the  suggestion  of  a  government  committee, 
there  was  tried  out  on  shipyards  on  the  River  Weir  a  policy  of 
pooling  labor  which  expedited  output.  The  yards  were  so  close 
that  a  man  could  go  to  any  one  of  eight  or  ten  yards  from  his 
home  with  ease.  Under  the  old  narrow-trade  single-yard  system 
there  was  a  lot  of  lost  time,  one  group  waiting  for  another  to 
finish  some  part  of  the  ship.  Certain  processes  must  be  finished 
in  sequence,  and  it  is  very  difficult  even  in  peace  times  to  keep 
them  all  flowing  in  such  a  way  that  everybody  is  busy  all  the 
time.  Sometimes  this  trouble  became  worse  through  the  em- 
barrassed supplies  of  materials  during  the  war.  By  this  new 
arrangement  the  plants  shifted  workmen  around  so  that  all 
workers  of  every  kind  could  be  busy  all  the  time — a  thing  quite 
impossible  in  a  single  yard. 

'  Lloyd's  Weekly,  June  16,  1916. 


SHIPBUILDING  IN  THE  UNITED  KINGDOM        251 

Another  part  of  this  Weir  plan  ^  was  the  bunching  of  work 
on  all  ships  that  were  nearly  done,  so  that  they  might  be  put 
in  the  water  as  quickly  as  possible.  Decision  as  to  the  focusing 
of  the  mobile  labor  on  the  ships  that  could  be  finished  first,  lay 
in  the  hands  of  a  local  committee,  composed  of  the  local  board 
of  trade  surveyor  and  the  surveyor  of  Lloyd's  Register  of 
Shipping. 

The  River  Tyne  (Newcastle  district)  almost  immediately 
copied  the  Weir  plan,  which  shortly  became  general  in  its  appli- 
cation. By  1918  it  was  reported  in  some  sections  to  be  but  little 
used  for  the  following  reasons.  (1)  The  employer  was  afraid 
to  let  a  man  get  away  for  even  a  day  for  fear  the  rival  would 
keep  him.  (2)  There  was  such  labor  shortage  that  there  was 
virtually  no  waiting  for  work,  a  condition  which  priority  in 
materials,  with  consecjuent  more  dependable  supply,  had  helped 
to  produce. 

These  changes  in  the  habits  of  organized  labor  were  made  as 
a  result  of  much  patience,  tact  and  diplomacy,  and  as  a  result 
of  conferences  which  may  be  said  to  have  resulted  in  treaties. 
For  example,  the  Admiralty  appointed  Mr.  Lynden  McCassey 
as  Director  of  Shipyard  Labor,  and  he  addressed  one  Labor 
Union  Conference  after  another,  persuading  their  workers  to 
relax  their  rules  and  become  national  in  their  point  of  view. 
In  October,  191G,  Mr.  Balfour  congratulated  Mr.  McCassey 
upon  persuading  the  Liverpool  district  committees  (Labor)  to 
adopt  such  a  plan  which  Mr.  Balfour  said  was  "  of  the  greatest 
national  value  and  importance."  "  Five  months  later  Mr.  Mc- 
Cassey was  still  at  it,^  and  was  generally  credited  with  having 

'  Fair  play,  December  14,  1916. 

'  Lloyd's  Weekly.  October  13.  1916.  p.  3. 

'  Mr.  Lynden  McCassey,  K.C.,  Director  of  Shipyard  Labor,  addressed  a 
largely  attended  meeting  of  trade  union  delegates  this  afternoon  in  New- 
castle, and  explained  at  length  the  government  scheme  for  organizing  labor 
in  the  shipyards,  docks  and  marine  engine  works. 

The  transfer  of  men  from  yards  and  shops  where  they  are  not  required 
to  yards  and  shops  where  they  are  required ;  the  suspension  for  the  period 
of  the  war  of  all  customs  restricting  output;  the  introduction  and  the  use 
to  the  greatest  possible  extent  of  all  time  and  labor  saving  appliances,  such 
as  pneumatic  tools,  hydraulic  and  electric  tools  and  oxygen -acetylene  tools; 
the  introduction  of  an  appropriate  system  of  payment  by  results,  which  would 
secure  to  the  government  a  greater  output  and  to  the  workers  larger  earn- 


^52  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

achieved  the  national  adoption  of  "  labor  dilution."  This  deal- 
ing with  labor  of  a  region  en  bloc  indicates  an  aspect  of  the  situa- 
tion from  which  America  in  the  present  emergency  has  undoubt- 
edly suffered.  English  labor,  so  highly  organized,  can  be  dealt 
with  as  a  mass,  while  American  labor  can  in  many  cases  scarcely 
be  dealt  with  at  all  because  of  the  chaos  resulting  from  its  great 
lack  of  organization. 

Payment  by  Results 

Great  effort  was  made  at  this  time  to  introduce  payment  by 
results  rather  than  payment  by  mere  time.  Mr.  Lloyd  George 
made  a  statement  ^  to  the  effect  that  wherever  the  system  had 
been  introduced  there  was  an  increase  in  the  output  of  a  ship- 
yard by  20,  30,  and  even  40  per  cent. 

Status  of  British  Shipbuilding  at  the  Beginning  of  1917 

As  a  result  of  the  policy  of  "  diluted  "  labor  by  unskilled 
persons  of  any  sort  who  could  do  the  work,  Britain  had  more 
people  engaged  in  shipbuilding  in  1917  than  ever  before,  and 
while  figures  were  for  reasons  of  public  defense  withheld,  the 
First  Lord  of  the  Admiralty  declared  "  that  there  was  a  greater 
output  than  any  year  in  British  history,  and  that  900,000  workers 
were  employed. 

The  Woman  Shipbuilder 

Of  these  workers  a  surprisingly  large  and  rapidly  increasing 
number  were  women.  A  correspondent  of  The  Nezv  York 
Times  (September  30,  1917)  said: 

ings  for  the  increased  output;  and  the  introduction  of  a  reasonable  system 
of  interchangeability  of  work,  so  that  the  work  of  one  trade  for  which 
there  were  not  any  tradesmen  (workers)  for  that  trade  available  should  be 
undertaken  by  the  nearest  appropriate  trade. 

It  was  explained  by  Mr.  McCassey  that  the  foregoing  proposals  were 
intended  to  utilize  to  the  best  advantage  the  existing  skilled  men  in  the 
country,  and  that  when  such  measures  were  insufficient  to  meet  a  shortage, 
their  dilution  or  the  introduction  of  semi-skilled  labor  to  perform  more 
skilled  work  should  be  introduced.     (Lloyd's  PVeckly,  March  23,  1917,  p.  5.) 

'  Fairplay,  March,   1917,  p.  369. 

-  Glasgow  Herald,  December  29,  1917. 


SHIPBUILDING    IN    THE    UNITED    KINGDOM  253 

But  in  the  shipbuilding  yards  they  do  work  that  hereto^ 
fore  was  done  by  strong  men. 

In  every  yard  there  are  hundreds  of  them,  and  in  one 
plant,  just  visited  by  a  staff  correspondent  of  the  Associated 
Press,  6,000  of  them  are  employed.  They  are  dressed  in 
khaki  trousers  and  belted  coats,  which  reach  well  above  the 
knees.  Their  hair  is  tucked  up  under  little  round  khaki 
caps.  But  they  could  never  be  mistaken  for  men.  Nearly 
all  of  them  insist  upon  wearing  high-heeled  shoes,  and  their 
tastes  run  to  silk  stockings. 

Around  a  gigantic  machine  on  the  banks  of  the  Clyde  the 
correspondent  saw  seven  girls,  none  over  20,  lift  a  heavy 
steel  plate  and,  while  some  held  it  in  place,  one  guided  a 
punch  and  another  swung  a  lever  operating  the  punching 
mechanism.  They  were  working  as  if  their  lives  depended 
upon  speed,  and  they  worked  like  a  well  trained  team. 

Their  efforts  as  shipyard  workers  received  unmitigated  praise. 
The  Marine  Reviezv,  July,  1917,  p.  250,  says : 

F.  Kellaway,  a  member  of  the  British  Parliament  and  par- 
liamentary secretary  of  the  Ministry  of  Munitions,  recently 
stated  that  he  did  not  think  he  exaggerated  in  saying  that 
but  for  the  work  that  women  had  done  in  the  munition  shops 
of  Great  Britain  the  Germans  by  now  would  have  won  the 
war.  Women  were  doing  important  work  in  marine-engine 
building,  including  turning  and  connecting  rods,  propeller 
shaft  liners,  and  most  of  the  drilling.  So  wide  was  the 
scope  of  women's  labor  that  a  prominent  British  engineer 
expressed  his  firm  conviction  that,  given  two  more  years  of 
war,  he  would  undertake  to  build  a  battleship  from  keel  to 
aerial  in  all  its  complex  detail  entirely  by  women's  labor.^ 

The  Organization  and  Work  of  the  British  Government 
IN  Relation  to  Shipbuilding 

Priority  and  Price  Control  in  Steel  Industry  and  Shipbuilding 

In  the  beginning  of  the  war  the  British  followed  their  national 
instinct  of  letting  industry  alone  as  much  as  possible,  but  the 

'  Shipbuilders    from   some   parts   of    England   think  that    statement   much 
too  strong  for  their  districts. 


254         INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

logic  of  events  forced  a  rapidly  increasing  development  of  gov- 
ernment control. 

The  first  step  was  to  commandeer  the  yards  for  work  on  war- 
ships, but  the  development  of  munitions  industries  at  the  same 
time  promptly  produced  a  shortage  of  steel.  To  get  around  this 
trouble  the  government,  through  the  Ministry  of  Munitions,  had 
to  take  charge  of  the  steel  industry  both  for  price  fixing  and  dis- 
tribution of  product,  and  the  shipbuilding  industry  from  start  to 
finish  has  had  to  struggle  with  an  almost  continual  shortage  of 
supplies.  The  distribution  of  materials  brought  inevitably  a 
higher  control  of  industry — the  deciding  of  what  should  be  done 
and  what  left  undone.  Thus  the  government  very  early  in  the 
war  had  to  decide  that  this  ship  or  class  of  ships  rather  than 
that  other  class  should  be  completed.  The  prewar  individualistic 
shipbuilder  would  naturally  be  aggrieved  at  this,  and  it  is  also 
natural  that  certain  inefficiencies  and  occasional  grievous  mis- 
takes should  occur. 

On  several  occasions,  when  the  authorities  have  decided  to 
construct  oil-tank  steamers,  builders  have  been  ordered  so 
as  to  expedite  delivery,  to  utilize  whatever  was  on  the  stocks. 
But  it  has  happened  more  than  once  that  the  particular  gov- 
ernment official  in  charge,  being  ignorant,  of  course,  of  the 
minutige  of  shipbuilding,  ha?  naturally  enough  assumed  that 
the  more  forward  the  condition  of  any  boat  the  speedier  her 
readiness  for  any  service.  And  so  in  one  or  two  instances 
we  find  where  two  sister  ships  were  being  constructed  on 
adjacent  berths  for  general  cargo  carrying  purposes,  and 
one  was  all  framed  and  partly  plated,  and  the  other  had 
only  her  keel  laid,  the  Admiralty  ordered  the  former  to  be 
converted  into  an  oil-tanker,  which  necessitated  her  being 
stripped  down  to  the  keel;  while  if  the  other  had  been  requi- 
sitioned the  nation  would  have  been  saved  time,  labor  and 
expense.^ 

Out  of  this  necessary  practice  of  control  and  priority  orders 
there  rose  a  long  discussion  concerning  the  fulfilment  of  uncom- 

'  Fairplay,  February  17,  1916,  p.  263. 


SHIPBUILDING    IN    THE    UNITED    KINGDOM  255 

pleted  prewar  contracts  for  merchant  ships  which  had  been  set 
aside  on  the  commandeering  of  the  yards  for  government  work. 
The  merchant  contracts  had  no  war  clause  in  them.  Some  of 
them  were  made  on  the  basis  of  about  £6  per  ton  dead-weight  and 
when  builders  could  resume  work  on  them  in  191G  materials  and 
labor  had  gone  up  to  a  point  where  they  cost  much  more  than 
that/  and  new  contracts  could  be  easily  had  at  £12  per  ton.  The 
government,  however,  refused  to  compensate  the  shipyards  for 
any  difference  in  cost  on  the  unfinished  contracts,  although  the 
Admiralty  "  in  some  cases  paid  the  owners  damages  when  the 
work  on  their  ships  had  been  stopped  by  government  order. 
The  dilemma  w'as  settled  by  owners  in  at  least  95  per  cent  of  the 
cases  paying  the  difference  in  cost,"  as  they  could  well  afford  to 
do  owing  to  the  enormous  freights  which  then  prevailed  on  such 
ships  as  were  free  to  get  the  competitive  rate. 

Tlie  Shiphuilding  Dictator 
It  was  natural  that  the  various  authorities  having  control  of 
something  in  the  shipbuilding  field  should  make  conflicts  indi- 
cating a  need  for  greater  harmonizing  of  efifort.  Accordingly 
in  the  autumn  of  1916  we  find  so  authoritative  a  journal  as  the 
Liverpool  Journal  of  Commerce  calling  for  a  shipping  dictator. 
This  call  was  inspired  by  Lloyd's  Register  returns  for  shipbuild- 
ing which  showed  that  for  the  quarter  ending  September  30, 
1916,  the  vessels  completed  in  the  United  Kingdom  amounted  to 
the  alarming  total  of  but  71,000  tons  gross,  while  for  the  nine 
months  there  had  been  but  200,000  tons,  compared  with  a  normal 
output  of  at  least  a  million  tons,  and  with  losses  which  this  paper 
estimated  as  follows : 

For  the  period  of  the  war  to  date : 

Gross  Tons 

1.  Hindrance  of  new  construction 1,700,000 

2.  War    destruction... 1,520,000 

3.  Excessive    depreciation 1,000,000 

Total    4,220,000 

^  Actual  figures  showed  that  materials  had  gone  up  50  per  cent  and  labor 
75  per  cent.     (Fairplay,  May  4,  1916,  p.  709.) 
-  Fairplav.  March  16.  1916,  p.  446. 
'  Ibid.,  October  12,  1916,  p.  523. 


256  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

In  Spite  of  admitted  difficulties  it  is  hard  for  the  outsider 
to  believe  that  this  can  not  be  improved,  while  everyone 
claiming  any  general  knowledge  of  the  situation  is  well 
aware  that  many  more  ships  could  be  turned  out  without 
at  all  interfering  with  the  more  urgent  requirements  of  any 
other  section  of  our  fighting  machinery. 

Claims  on  the  manhood  of  the  country  and  on  the  output 
of  material  for  more  urgent  purposes  are  admitted ;  there  is 
no  complaint  on  this  account.  What  is  not  admitted  is  that 
it  is  necessary  to  employ  a  constantly  increasing  multitude  of 
officials  to  stifle  the  best  efforts  of  shipbuilders  and  appar- 
ently to  insure  that  what  available  labor  and  material  there 
is  will  be  wasted.  The  shipyards  of  the  country,  and  the 
supplies  of  labor  and  material  they  so  urgently  require  are 
being  wasted,  at  a  most  critical  period  of  our  history,  by 
the  grip  of  officialdom. 

The  complaints  against  the  existing  system  or  rather  mul- 
tiplicity of  systems  each  possessing  its  own  little  tin  head, 
are  universal.  The  shipbuilders  have  been  governed  by  a 
sense  of  loyalty  and  a  desire  to  do  all  that  is  possible,  but 
there  is  a  limit  to  what  can  be  borne  in  silence.  The  ship- 
building industry  needs  one  thing  to  put  it  right,  namely, 
an  autocrat,  one  strong  man  to  govern  everything;  to  see 
that  the  available  supplies  are  not  frittered  away;  to  insure 
that  the  man  who  can  best  build  big  ships  is  given  big  ships 
to  build,  and  not  toy  ships;  in  general,  to  arrange  things  on 
a  sensible  basis  and  prevent  every  official  suddenly  possessed 
of  temporary  power  from  overemphasizing  his  own  require- 
ments and  upsetting  everything  else.    .    .    . 

The  post  of  dictator  is  not  difficult  to  fill.  What  is  re- 
quired is  an  individual  who  is  intimate  with  the  shipbuilding 
industry,  and  whose  career  is  a  guarantee  of  strength  of 
character,  soundness  of  judgment  and  outstanding  ability.^ 

The  dictator  came  December  1,  with  a  change  in  government,  and 
the  appointment  of  Shipping  Controller  Sir  Joseph  Maclay,  who 
was  heralded  as  the  desired  practical  man,  and  has  since  been 
so  recognized.  Within  a  month  he  appointed  an  expert  com- 
mittee 

'  Liverpool  Journal  of  Commerce  quoted   in   Marine   Review,  December, 
1916,  p.  421. 


SHIPBUILDING    IN    THE    UNITED    KINGDOM  257 

consisting  of  leading  shipbuilders  and  engineers,  to  advise 
him  on  all  matters  connected  with  the  acceleration  of  mer- 
chant ships  now  under  construction  and  nearing  completion, 
and  the  general  administration  of  a  new  merchant  ship- 
building program.  This  is  a  matter  of  the  first  importance. 
Than  the  men  chosen,  a  better  or  more  capable  list  could  not 
have  been  selected.  They  represent  the  Shipbuilding  Em- 
ployers' Federation,  the  Engineering  Employers'  Federation, 
the  Board  of  Trade,  Lloyd's  Register,  and  the  Clyde  and 
Northeast  Coast  local  employers'  associations  in  shipbuilding 
and  engineering,  and  their  experience  and  technical  knowl- 
edge are  practically  unlimited;  and  there  being  behind  them 
the  driving  force  of  the  Shipping  Controller  himself,  and 
behind  him  the  new  government,  we  should  soon  be  hearing 
of  things  done.^ 

The  Standardized  Fabricated  Ship 
The  new  controller  promptly  started  in  to  apply  the  idea  of 
standardization  by  letting  contracts  for  standard  ships  for  gov- 
ernment account. 

The  government  has  issued  specifications  for  a  number  of 
cargo  steamers  of  the  single-deck  type,  to  carry  8,000  to 
10,000  tons  dead-weight,  which  are  to  be  as  simple  and 
inexpensive  in  design  as  possible,  in  order  that  they  can  be 
turned  out  quickly.  The  hulls  and  machinery  are  to  be 
standardized  and  the  vessels  are  to  have  priority  in  construc- 
tion. These  specifications  have  been  in  the  hands  of  the 
builders  for  some  little  time,  and  already,  it  is  understood, 
orders  for  some  20  ships  have  been  placed  on  the  Clyde,  and 
now  a  like  number  are  in  process  of  being  contracted  for 
on  the  Northeast  Coast  and  elsewhere.  Before  long  it  is 
estimated  that  40  to  50  of  these  vessels  will  be  in  hand  and, 
as  nothing  is  to  stand  in  the  way  of  their  construction,  early 
delivery  is  expected. 

As  completed,  the  vessels  w'ill  be  taken  over  by  the  Ad- 
miralty and  engaged  in  trade  essential  to  the  nation,  chiefly 
grain  and  food  carrying".  After  the  war  is  over  the  vessels 
will  be  offered  for  sale  to  private  owners,  and  when  that 
time  comes  they  are  certain  to  find  ready  buyers.^ 


'  Fatrplay,  January  4,  1917,  p.  22. 

"  Lloyd's  JVcekly,  January  19,   1917,  p. 


7. 


258  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

This  process  of  standardization  which  was  discussed  at  length  in 
the  last  chapter  aroused  considerable  opposition.  Each  builder 
wanted  to  follow  his  own  standard  and  duplicate  his  last  good 
ship  rather  than  change  over  to  the  national  standard,  which  for 
every  maker  involved  some  readjustment.  But,  fortunately,  the 
Shipping  Controller  had  his  way,  commandeering  for  his  stand- 
ardized ships  "  every  available  berth  in  the  Kingdom."  ^  He 
was  soon  advertising  "  for  engineering  firms  anywhere  in  the 
United  Kingdom  not  usually  engaged  in  building  marine  engines, 
who  could  undertake  this  class  of  work.  The  marine  engine 
shortage  had  been  acute  for  a  year.^  As  a  result  of  the  stand- 
ardization policy,  plants  in  inland  cities  like  Birmingham  which 
had  had  little  to  do  with  shipbuilding,  but  had  built  engines,  were 
soon  building  marine  engines.  Owing  to  standard  designs  an  en- 
gine made  anywhere  could  be  swung  into  the  hold  of  a  ship  in  al- 
most any  yard.  By  November  a  half  million  tons  of  these  standard 
ships  were  under  way,  another  half  million  under  contract,  and 
the  first,  a  batch  of  seven,  had  gone  to  sea.  While  the  opponents 
of  the  government  policy  objected  to  the  number  of  changes  in 
the  design,*  and  opposition  was  chiefly  based  on  the  short  view 
of  a  few  months  rather  than  the  longer  view  of  a  few  years,  the 
consensus  of  well  informed  opinion  now  approves  of  the  stand- 
ardization plan.°     It  was  really  but  an  enlarged  application  of 

'  Fairplay,  March  8.  1917. 

=  Ibid.,  April  19,  1917,  p.  64. 

'  Ibid.,  November  23,  1916. 

*  Judging  from  what  shipbuilders  have  told  me,  the  first  model  left  very 
much  to  be  desired,  and  the  alterations  during  construction  have  been  so 
numerous  that,  but  for  the  fact  that  the  controller  had  the  Defense  of  the 
Realm  Act  behind  him,  some  builders  would  have  refused  to  go  on  with 
the  contract  until  the  minds  of  the  authorities  were  made  up  as  to  what  was 
really  wanted.  For  instance,  fancy  any  shipowner  ordering  an  ordinary 
cargo  steamer,  and  then,  when  she  was  well  under  way,  informing  the 
builders  that  she  must  be  so  built  as  to  carry  an  oil  cargo ! 

For  instance,  if  the  Shipping  Controller  had  ordered  the  "standard  ships  to 
be  built  to  the  same  dimensions,  but  on  the  Isherwood  System  and  not  the 
old  transverse  type,  and  had  used  the  same  amount  of  hull  steel,  instead  of 
100,  say,  400  foot  vessels,  of  800,000  tons  dead-weight,  he  could  have  secured 
109  hulls  of  890,500  tons  dead-weight.     (Fairplay,  May  3,  1917,  p.  733.) 

"  Rather  glaring  examples  are  cited,  however,  in  which  builders'  capacity 
was  wasted  by  being  compelled  to  build  three  types  of  ship  in  the  same  yard. 
(Fairplay, 'May  24,  1917.) 

Complaint  was  also  made  because  builders  were  not  allowed  to  finish  work 
that  they  already  had  in  the  yards. 


SHIPBUILDING    IN    THE    UNITED    KINGDOM  259 

the  principle  whereby  the  yards  of  a  given  district  pooled  their 
labor.  To  quote  the  words  of  Mr.  Runciman,  President  of  the 
Board  of  Trade : 

Large  groups  of  yards  and  engine  shops  must  be  treated  as 
one  large  establishment,  within  which  labor  and  all  other 
resources  must  be  capable  of  being  moved  about  from  hour 
to  hour  as  work  may  require.  But  behind  shipbuilding  there 
is  the  even  more  difficult  question  of  materials.  The  gov- 
ernment are  bringing  back  skilled  steel-workers  from  the 
,  army,  extending  their  steel  works  and  rolling  mills,  relight- 
ing blown-out  blast  furnaces,  and  making  such  arrangements 
as  will,  they  hope,  provide  "  enough  for  their  requirements 
and  something  to  spare  for  Italy  and  France."  ^ 

The  District  Speeding  up  Coniniittees 

As  evidence  of  the  economies  of  this  system,  as  applied  in 
England,  it  may  be  pointed  out  that  they  were  able  to  reduce 
the  number  of  sizes  of  sections  that  had  to  be  rolled  for  ship 
framing  from  40  to  less  than  10.  Some  builders  were  wedded 
to  a  frame  9/16  inch  thick,  others  10/16  inch  (5/8),  others 
11/16  inch,  differences  so  small  as  to  be  difficult  to  measure,  but 
as  bothersome  to  make  as  any  differences.  The  Committee  on 
Standards  (fortunately  there  had  been  a  Parliamentary  Commit- 
tee on  Standards  before  the  war)  ordered  them  made  to  standard 
size,  which  as  above  mentioned  reduced  the  number  of  angle 
sections  from  40  to  less  than  10.  It  may  really  be  said  that  there 
was  more  standardization  of  ship  sections  than  standardization  of 
ships,  although  seven  standard  types  of  ships  were  built,  from 
A  to  G,  running  from  2,500  to  10,000  tons  dead-weight.  No 
liners  were  built,  because  it  is  three  or  four  times  as  much 
trouble  to  build  a  liner  with  passenger  accommodations  as  it  is 
to  build  a  single-deck  tramp,  which  is  really  a  great  floating  iron 
box  with  some  machinery  in  one  end  and  minimum  housing- 
accommodations  in  the  other. 

The  standardization  of  sections  to  be  used  all  over  the  United 

'  Fairhlay,  November  23,   1916,   p.   749. 


260  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Kingdom  greatly  increased  the  capacity  for  output  of  material. 
Thus  in  the  old  days  a  rolling  mill  would  get  an  order  for  200 
tons  of  angles,  roll  them,  and  then  spend  12  hours  resetting  the 
rolls.  Now  the  orders  go  to  the  Admiralty  Overseas  Steel  Super- 
intendent. He  distributes  them  to  the  rolling  mills  of  the  King- 
dom. One  mill  is  put  to  rolling  one  size  and  keeps  it  up  until 
the  machinery  needs  to  be  repaired.  With  these  definite  methods, 
in  combination  with  rigid  priority  order  numbers,  the  British  ship- 
builder can  once  more  have  some  certainty  as  to  when  he  will 
get  his  material. 

In  the  attempt  to  further  coordinate  the  work,  the  First  Lord 
of  the  Admiralty  appointed  in  March  ^  committees  in  various 
shipbuilding  centers  for  the  sole  purpose  of  expediting  shipbuild- 
ing both  naval  and  merchant.  The  district  committee  of  the  Clyde 
and  East  Coast,  Scotland,  consisted  of  three  persons,  of  whom  one 
was  assistant  director  of  shipyard  labor,  another  a  director  of 
the  technical  section  of  the  shipyard  labor  department,  and  the 
third  an  experienced  shipbuilder. 

Royal  Patronage 

In  the  attempt  to  put  enthusiasm  into  shipbuilders  of  all  classes, 
but  especially  the  merchant  shipbuilder,  the  British  pet  device  of 
royal  patronage  was  not  forgotten.  In  September,  1917,  poor 
King  George  put  in  four  weary  days  in  the  Clyde  yards,  osten- 
tatiously neglecting  warships  for  the  first  time,  but  busily  climb- 
ing over  tramps,  tugs,  barges,  dredges  in  yard  after  yard.  Two 
months  later  he  "  displayed  peculiar  interest,"  in  food  storing, 
food  handling  and  shipbuilding  facilities  in  the  port  of  London. 

Admiralty,  War  Office  and  Ministry  of  Shipping  Combine  on 
Building  Control  and  Start  Government  Plants 

In  May,  1917,  came  another  attempt  to  consolidate  and  utilize 
shipbuilding  resources  to  the  best  advantage.  The  Admiralty, 
trying  to  duplicate  the  organization  which  had  supplied  the  army 

'  Lloyd's  Weekly,  March  30,  1917,  p.  5. 


SHIPBUILDING    IN    THE    UNITED    KINGDOM  261 

with  munitions,  brought  all  the  shipbuilding  matters  under  one 
authority,  placing  Sir  Eric  Geddes  ^  in  control  of  the  shipbuilding 
work  of  the  Admiralty,  the  War  Office,  and  the  Ministry  of 
Shipping.-  For  a  few  months  Sir  Eric  was  busy  with  the 
establishment  of  the  standardized  ship  program  and  then  he  made 
an  announcement  of  the  government's  intention  of  building  and 
operating  government  owned  plants,  which  once  more  set  the 
shipbuilding  world  into  a  buzzing  objecting  discussion.^  Ship- 
builders pointed  out  that  nearly  every  shipyard  in  the  United 
Kingdom  had  increased  its  facilities  during  the  war.*  For 
example,  Harlan  &  Wolf  at  one  time  added  41  acres  to  their 
Belfast  yard.  It  was  also  pointed  out  that  almost  every  yard 
in  the  country  was  short  of  labor,  that  they  were  mostly  short 
of  materials,  and  if  new  facilities  were  wanted  each  yard  could 
be  further  enlarged.  Therefore,  why  the  announcement  of  Sir 
Eric  in  his  first  speech  as  First  Lord  of  the  Admiralty: 

We  have  decided  that  four  (later  reduced  to  three)  new 
national  yards  at  least  will  be  necessary,  and  in  this  we  are 
following  the  precedent  so  successfully  applied,  and  so 
courageously  carried  through,  in  the  case  of  the  Ministry 
of  Munitions  two  years  ago  in  their  national  factories.^ 

The  government  stated  that  by  the  time  the  new  yards  were  built 
they  hoped  to  be  able  to  make  enough  steel  for  them  to  use  and 
to  have  enough  labor  trained  up,  with  perhaps  the  assistance  of 
some  foremen  from  the  old  yards,  to  run  the  new  plants.*^  To 
the  amazement  of  the  shipbuilding  world  the  locations  when  an- 
nounced were  not  in  one  of  the  old  centers,  but  in  a  new  one  on 

'  The  shipbuilders  thought  this  was  a  great  joke  because  Sir  Eric  was  a 
railroad  administrator  who  happened  to  have  had  some  American  experience. 
This  criticism  did  not  apply,  for  his  task  was  one  of  higher  administration 
dealing  with  men  and  organization.  (See  discussions  of  personnel  of  United 
States  Shipping  Board  in  next  chapter.) 

"-Lloyd's   Weekly,  May   18.   1917,  p.  5. 

'  Shipbuilder,  December,   1917 

'  "  Our  producing  capacity  has  been  enormously  increased."  {Fair play, 
July  26,  1916.) 

'  Fairplay,  November  8,  1917,  p.  777. 

°  Ibid.,  November  22,  1917. 


2G2  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

the  River  Severn.  They  were  to  have  thirty-five  berths,  and  were 
located 

(1)  At  Chepstow,  at  the  mouth  of  the  Wye. 

(2)  At  Portbury,  near  Portishead,  near  the  mouth  of  the 
Avon;  and 

(3)  At  Beachley,  a  mile  and  a  half  east  of  Chepstow,  on  the 
banks  of  the  Severn.^ 

The  cost  was  to  be  £3,800,000.  Work  was  proceeding  on  them 
by  January  1  and  they  were  expected  to  have  much  influence 
during  the  year  1918.  There  was  great  industrial  activity  in 
the  district  as  a  result  of  new  plants  being  located  there. 

These  new  plants  were  of  course  to  be  occupied  with  the 
standard  ships  fabricated  from  pieces  prepared  with  the  greatest 
possible  simplicity. 

The  vessels  built  will  be  the  plainest  of  plain  structures;  in 
shape  they  will  dispense  almost  wholly  with  the  bending  of 
frames  and  plates.  They  will  be  composed  of  a  remarkably 
small  number  of  sections,  and  all  the  frames,  plates,  angles, 
and  bars  will  be  manufactured  to  sizes  at  specified  steel 
works,  and  "  assembled  "  at  the  yards  by  "  unskilled  "  labor 
(composed  largely  of  prisoners  of  war),  working  under  the 
direction  of  leading  hands  and  foremen  drawn  from  privaie 
establishments  or  from  the  national  dockyards." 

Britain's  Shipbuilding  Problem  and  Prospects 

In  a  parliamentary  discussion,  March  20,  1918.  Sir  Eric 
Geddes  announced  a  new  policy  of  frankness  with  regard  to  sub- 
marine losses,  which  he  said  during  the  previous  twelve  months 
had  been  0,000,000  tons  rather  than  the  9,500,000  tons  claimed 
by  the  Germans.  He  showed  that  British  shipbuilding  during 
the  last  quarters  of  each  of  the  three  previous  years  had  been: 

1915  42,000  tons 

1916 2L3,000     " 

1917  420,000     " 

'  Lloyd's   Weekly,   November    16,    1917,   p.   5. 
"  Glasgow  Herald,  December  29,  1917,  p.  30. 


SHIPBUILDING    IN    THE    UNITED    KINGDOM  263 

and  that  during  the  latter  quarter  of  1917  foreign  construction 
had  been  512,000  tons,  making  a  total  output  for  the  quarter  of 
i)32,000  tons,  while  the  losses  during  the  same  period  had  been 
1,200,000  tons,  the  lowest  since  the  intensive  submarine  war 
began.  He  pointed  out  that  the  Allies  were  within  100,000  tons 
a  month  of  making  good  their  losses  and  were  replacing  75  per 
cent  of  their  lost  tonnage.  Unfortunately,  however,  Sir  Eric 
had  to  admit  that  British  output  during  the  first  months  of  1918 
had  been  unsatisfactory.  It  went  down  almost  exactly  a  third 
from  -120,000  tons  in  three  months,  October  to  December,  1917, 
to  424,000  tons  in  four  months,  January  to  April,  1918.  This 
was  due  in  part  to  the  recurrence  of  labor  difficulties,  and  partly 
to  the  enormous  increase  of  repair  work,  which  had  increased  80 
per  cent  between  August,  1917,  and  February,  1918.^  The  dock- 
ing of  British  naval  craft  for  repairs  in  the  last  quarter  of  1917 
was  tenfold  that  of  peace  times,  amounting  to  more  than  1,000 
ships  a  month.  The  men  so  employed  might  have  produced  a 
half  million  tons  of  merchant  ships  if  they  had  been  engaged  on 
that  work.  Two  weeks  earlier  Sir  Eric  had  stated  that  repairs  ^ 
were  taking  more  men  than  new  merchant  ship  construction,  and 
at  the  same  time  Sir  John  Ellerman,  controlling  owner  of  several 
steamship  lines,  declared  his  belief  that  the  whole  output  of  ship- 
ping in  Britain  since  the  beginning  of  the  war  was  not  enough  to 
replace  the  losses  by  marine  causes  alone.  It  is  undoubtedly 
true  that  the  running  of  vessels  on  irregular  courses,  without 
lights,  has  resulted  in  a  great  increase  in  loss  by  accident  and 
wreck.  Numerous  torpedoed  ships  staggered  into  the  British  dry 
docks  for  repairs.  Repair  facilities  have  therefore  become  as 
scarce  as  steel  was  in  1915,  and  have  had  to  be  apportioned  out 
in  the  same  way.  If  a  ship  is  injured,  a  local  port  committee, 
consisting  of  the  chief  surveyor  of  Lloyd's  Register  of  Shipping 
and  the  Board  of  Trade  Surveyor,  decide  what  shall  be  done  to 

'  Boats  which  ought  to  be  docked  for  long  overdue  painting  and  examina- 
tion can  not  be  docked,  as  docks  are  only  available  by  waiting  and  sometimes 
this  seems  a  long  and  costly  waste  of  time,  everything  being  under  govern- 
ment control.     (F airplay,  October  11,  1917,  p.  605.) 

'  Philadelphia  Evening  Telegraph,  March  6,  1918. 


264         INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

the  ship.     The  owner  has  nothing  to  say  about  it.     If  they  tell 
him  to  repair  her  temporarily  and  limp  along,  he  must  do  so.     If 
they  order  thorough  repairs,  he  must  comply,  his  own  opinion, 
to  the  contrary  notwithstanding. 

The  enormous  increase  of  repair  work  in  British  yards,  com- 
bined with  the  German  offensive  and  the  call  for  more  men,  has 
put  Britain  into  a  serious  dilemma  which  may  yet  vindicate  the 
prophets  of  evil  who  predicted  that  there  would  be  no  need  for 
the  government  shipyards. 

The  slump  in  output  at  the  beginning  of  1918  emphasized  labor 
shortage.  To  meet  this  Lloyd  George  promised  to  bring  back 
20,000  expert  shipbuilders  from  the  army,  but  the  attempt  to 
find  them  in  the  army  in  places  where  they  could  be  spared, 
promised  so  to  injure  the  military  units  that  but  2,000  men  came. 

March  20,  1918,  Lloyd  George,  replying  to  criticisms  in  Par- 
liament, said  that  shipbuilding  had  not  stopped  for  lack  of  steel 
or  steel  plates  but  that  the  difiiculty  had  been  largely  one  of  labor. 
He  then  went  on  to  state  that  every  man  in  the  home  service 
skilled  in  shipbuilding,  had  already  been  taken  from  the  army. 
But  when  it  was  demanded  that  20,000  men  should  be  with- 
drawn forcibly  from  the  European  field,  it  raised  a  very  serious 
question.  Many  of  them  were  assigned  to  the  manning  of  bat- 
teries, and  were  the  mainstay  of  complete  organizations. 

Thus  England  with  unsatisfactory  output  of  tonnage  faced 
the  paralyzing  dilemma  presented  by  the  German  advance  in 
Flanders  and  the  need  for  ships.  Where  should  she  put  the  men  ? 
Should  she  increase  the  shipbuilding  forces  which  she  so  impera- 
tively needed?  It  is  natural  that  they  have  frankly  admitted 
lor  many  months  that  America  was  the  only  hope  of  getting  suf- 
ficient tonnage  to  meet  the  Allied  emergency.  Fortunately,  most 
fortunately,  America  is  now  getting  down  to  shipbuilding  in  fair 
earnest.  Inventions  have  embarrassed  the  submarine  and  re- 
duced its  efficiency  so  that  the  latest  returns  for  the  month  of 
.\pril  show  that  for  the  first  time  in  many  months,  world  launch- 
ings  surpassed  world  sinkings. 


CHAPTER  X 
Shipbuilding  in  the  United  States,  19 14  to  May,  1918 

Two   Periods   of   Shipbuilding 

Merchant  shipbuilding  in  the  United  States  during  the  war 
falls  into  two  very  distinct  epochs:  the  first,  that  during  which 
there  was  private  building  only,  the  ships  being  built  for  private 
parties  of  any  nationality.  This  epoch  lasted  from  the  beginning 
of  the  war  down  to  the  middle  of  1917,  when  the  second  epoch 
began  with  the  United  States  Government,  through  the  United 
States  Shipping  Board,  starting  the  firm  policy  of  control  of 
private  shipyards,  even  to  the  point  of  requisitioning  all  un- 
finished ships,  and  also  starting  in  upon  the  plan  of  building  gov- 
ernment shipyards  for  operation  on  government  account. 

The  Revival  of  Building  Early  in  the  War 

The  war  opened  in  a  period  when  the  unusual  dullness  of  the 
shipping  business  had  been  emphatically  passed  on  to  the  ship- 
yards of  the  United  States  as  w.ell  as  Europe.  In  October,  1914, 
Shipping  Illustrated  said  that  few  of  our  leading  yards  were 
able  to  earn  anything  over  fixed  charges  and  interest.  This 
could  not,  however,  be  attributed  to  the  heavy  admission  of 
foreign  vessels  to  American  registry  for  that  fact  had  no  in- 
fluence on  the  world's  freight  market,  as  it  in  nowise  increased 
the  total  availaljle  tonnage.  Nor  did  it  have  ahy  influence  on 
the  American  yards  because  for.  years  they  had  had  almost 
nothing  to  do  with  the  building  for  the  world's  overseas  trade. 
Later  in  the  same  month  Lloyd's  Weekly  (October  23,  1914), 
London,  predicted  that : 

While  the  war  lasts  there  is  unlikely  to  be  any  demand 
for  new   ocean-going  cargo  vessels,   so   perplexing   is   the 

266  > 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       267 

trade  outlook  for  even  the  shrewdest  shipowners.  .  .  . 
The  most  prominent  feature  of  the  British  shipbuilding- 
situation  has  been  for  some  time  the  absence  of  any  con- 
siderable demand  for  true  cargo  boats  of  the  ocean  way- 
faring class. 

Two  weeks  later  Fairplay,  observing  the  rise  in  rates,  predicted 
a  rise  in  price  of  shipping,  and  told  of  one  British  shipyard  that 
was  beginning  to  lay  down  tramps  on  speculation  and  was  de- 
clining to  make  definite  contracts  because  of  the  expectation  of 
higher  prices  before  the  ship  could  be  completed.  The  accuracy 
of  this  prophecy  was  abundantly  vindicated  by  the  sudden  burst 
of  shipbuilding  prosperity  which  within  a  half  year  had  reached 
to  every  corner  of  the  globe.  At  the  end  of  the  next  June,  the 
Marine  Reviczv  (July,  1915,  p.  252)  said: 

Prosperity  so  long  denied  coast  shipbuilders  has  burst 
upon  them  on  a  scale  completely  exceeding  the  most  opti- 
mistic expectations  and  with  such  abruptness  as  to  render 
the  present  capacity  quite  inadequate  to  meet  the  demand. 
From  Newport  News  to  Bath,  and  from  Los  Angeles  to 
Seattle  practically  every  berth  is  filled  with  a  new  bottom 
in  some  stage  of  construction,  while  many  more  craft  are 
under  contract  and  await  their  turn  on  the  blocks.  Since 
December  1,  it  is  ascertained  by  carefully  compiled  records, 
no  less  than  35  new  merchant  vessels  of  good  size  have  been 
awarded  to  the  Atlantic  yards  alone,  aggregating  approxi- 
mately 200,000  gross  tons. 

The  Revolution  in  Ship  Price  and  the  Great  Boom  in 

Building 

This  coming  of  business  to  America,  for  America  was  now 
beginning  to  build  for  Europe,  meant  complete  revolution  in 
ship  price.  Whereas  the  Marine  Review  (October,  1914) 
pointed  out  that  a  certain  kind  of  ship  would  cost  $200,000  in 
the  United  Kingdom,  and  $300,000  in  the  United  States,  ten 
months  later  the  plight  of  British  shipyards  was  such  that  Fair- 
play  (August  20,  1915)  reported  British  builders  only  willing 
to  contract  for  delivery  in  twenty-three  months  and  at  prices 


268 


INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 


more  than  those  prevailing  in  the  United  States.  The  entire 
disappearance  of  all  prewar  conditions  and  the  dorninance  of 
war  costs  was  shown  by  the  fact  that  by  the  middle  of  191G  ^ 
American  shipyards  were  getting  contracts  at  $140  and  $150  a 
ton,  while  the  cost  of  British  shipping  twenty-seven  months  be- 
fore had  in  a  number  of  cases  been  found  to  average  £5  16s.  7d. 
per  ton  for  cargo  boats. ^ 


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DIAGRAM    SHOWING    SHIPBUILDING    CAPACITY    OF    UNITED    STATES    IN 
TONS  PER  YEAR  AT  END  OF  EACH  YEAR,   1914  TO   1918,   INCLUSIVE 

— From  Marine  Review,  February,  1918. 

In  its  February  issue,  1916,  the  Marine  Review  published  a 
report  of  a  survey  of  American  yards,  showing  that  they  were 
booked  far  ahead,  that  two  of  the  largest  Atlantic  yards  would 
not  promise  any  more  deliveries  inside  of  -two  years,  and  that 
they   were   embarrassed   by   labor   shortage.      The   next   month 

'  Fairplay,  August  31,  1916. 
'  Ibid.,  :May  14,  1914. 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       269 

the  same  journal  reported  that  $100,000,000  of  new  capital 
had  gone  into  American  shipyards  in  the  first  eighteen  months 
of  the  war.  It  also  reported  that  most  yards  could,  if  neces- 
sary, enlarge  their  capacity  from  15  to  60  per  cent  within  twelve 
months.  This  was  the  shipbuilders'  answer  to  the  congressional 
discussions  of  the  proposal  to  build  ships  with  government  money. 
Naturally,  however,  the  American  shipbuilder  was  loath  to  put 
good  capital  into  an  industry  which  he  knew  was  a  strictly 
mushroom  industry,  namely,  the  building  for  foreign  owners, 
a  thing  which  under  normal  conditions  of  peace  he  had  not 
been  able  to  do  for  half  a  century  and  which  the  return  of  peace 
promised  to  promptly  take  away  from  him.  He  had  it  now, 
but  could  he  get  enough  money  out  of  it  while  it  lasted  to  pay 
reasonable  profits,  plus  principal,  plus  interest?  It  looked  doubt- 
ful with  the  Allies  constantly  declaring  that  each  year  would  be 
the  last  of  the  war.  Meanwhile  we  built  ships  with  all  speed 
and  the  British  lamented  the  novel  spectacle  of  America  build- 
ing liners  for  Clyde  owners. 

She  is  building  a  lot  of  vessels  for  Norway,  and  some 
for  France,  but  it  does  seem  to  be  the  limit  that  she  should 
be  building  liners  for  Clyde  owners.^ 

The  maternal  position  of  Britain  in  the  shipping  world  was 
shown  by  the  fact  that  most  of  these  new  vessels  were  built 
under  Lloyd's  survey,  which  organization  had  to  increase  its 
staff  of  surveyors  in  the  United  States  to  fifty  by  the  middle 
of  1916.^  Shortly  after  this  one  important  American  shipyard 
received  reassurance  in  the  form  of  a  contract  to  build  for  a  cer- 
tain length  of  time  for  one  of  the  best  known  British  shipping 
companies  at  100  per  cent  profit.  A  single  bank  reported  han- 
dling .$50,000,000  for  Norwegian  capitalists  buying  ships  in  the 
United  States.  Under  such  stimulation  as  this  it  is  easy  to  see 
why  the  industry  would  stretch  to  its  limit.  One  of  the  phases 
of  this  expansion  was  the  revival  of  the  decadent  industry  of 

'  Fairplav.  April  27,  1916. 
'Ibid.,  July  13,  1916. 


270  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

wooden  ship  building,  which  indeed  had  almost  become  a  lost 
art. 

The  yards  of  New  England,  which  long  ago  resounded 
with  the  thump  of  hammer  and  caulking  iron  as  the  famous 
clipper  ships  of  the  past  were  molded  into  magnificence, 
have  been  rehabilitated  and  now  are  busily  turning  out 
smart  auxiliary  schooners.  Ghosts  of  ships,  long  left  to 
decay  at  their  anchorages,  have  been  resurrected,  rebuilt, 
and  sent  once  more  to  ply  the  ocean  highways.^ 

A  year  ago  the  builders  of  wooden  ships  at  North  Pacific 
yards  were  practically  idle;  today  these  same  plants  are  en- 
joying a  period  of  activity  never  before  experienced  in  the 
western  section  of  the  maritime  world.  .  .  .  It  is  nearly 
13  years  since  the  last  large  wooden  sailing  schooner  was 
built  on  the  west  coast.  ...  A  dozen  lean  years,  during 
which  shipowners  almost  faced  bankruptcy,  lumber  freights 
being  at  a  starvation  ebb,  brought  an  end  to  the  business  of 
building  wooden  ships  of  large  size  on  the  Pacific.  Now 
it  is  coming  again  into  its  own. 

In  a  brief  space  of  six  months,  over  15  large  new  wooden 
vessels  of  various  types  have  been  launched  from  North 
Pacific  yards." 

There  has  been  a  remarkable  demand  for  wooden  auxili- 
ary lumber  schooners  ranging  in  capacity  from  1,000,000 
to  2,250,000  feet,  board  measure,  but  the  activity  is  not 
confined  to  any  one  branch  of  work,  for  it  includes  steel 
steamships,  large  wooden  motorships,  and  smaller  gas  ves- 
sels. Every  yard  on  the  coast  from  Vancouver  to  San 
Pedro  is  crowded  with  construction  work  and  every  few 
days  announcement  is  made  of  some  concern  being  incor- 
porated for  the  purpose  of  shipbuilding.  No  less  than 
eight  such  concerns  filed  articles  in  Washington  during  the 
last  sixty  days  of  the  year.'' 

Shortage  of  Labor  and  Materials,  1911-1916 

The  expanding  industry  was  checked  by  the  two  limits  of 
labor  shortage  and  material  shortage.     There  was  great  unrest 


'  Marine  Reviczv,  February,  1917,  p.  43. 
■  Ibid.,  February,  1917.  pp.  63-64. 
'  Ibid.,  February,  1917,  p.  50. 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    191S       271 

in  labor  because  the  new  shipyards  took  labor  from  the  old,  and 
the  'old  yards  took  labor  from  each  other,  and  workmen  suffering 
from  undue  prosperity  began  to  develop  the  inefficiency  that 
usually  results  from  such  conditions.  Materials  were  equally 
hard  to  get.  The  Marine  Review  (November,  191G)  reported 
that  ship  plates  were  sold  up  for  the  next  eight  months,  although 
there  was  great  increase  in  the  output,  that  of  1915  having  in- 
creased over  the  preceding  year  to  1,900,000  tons  from  1,300,000 
tons.  Some  of  the  ship  plates  were  11  feet  wide  and  required 
special  rolling  mills  to  make  them,  and  as  there  had  been  no 
previous  demand  for  them,  the  steel  companies  were  slow  to 
enlarge  their  plants  for  this  product,  especially  as  it  required 
a  great  deal  of  expense.  Shipyards  were  also  short  of  engines 
and  were  compelled  to  use  less  desirable  types  than  had  been 
planned.^  At  this  time  the  British  heralded  with  praise  our 
"  remarkable  work  "  in  shipbuilding  in  Baltimore  and  San  Fran- 
cisco." Five  months  later  the  same  journal  admitted  American 
leadership  in  speed  as  follows : 

A  5,260-tonner  was  launched  in  three  months  from  the 
laying  of  the  keel ;  a  tanker  of  10,200  tons  was  launched 
in  three  months  and  three  days ;  while  similar  records  were 
made  with  other  vessels.  These  records  have  never  been 
approached  in  this  country  in  ordinary  practice.^ 

The  Coming  of  the  United  States  Shipping  Board 

While  the  American  yards  were  booked  years  ahead  with 
orders,  and  were  months  behind  on  materials,  there  raged 
through  the  summer  of  191G  the  discussions  of  the  Shipping 
Board  bill  which  became  a  law  in  September,  191 G,  and  then 
hung  as  a  factor  of  suspense,  on  the  shipping  world  for  months 
before  the  Board  was  appointed,  and  caused  much  speculation 
as  to  what,  when  appointed,  it  could  and  would  do.  There  was 
not  a  shipbuilder  on  the  Shipping  Board  as  first  organized.     It  is 

'  Fairphv.  April  19,  1917. 
"-Ibid.,  January  11,  1917,  p.  69. 
'  Ibid..  June  7,  1917,  p.  937. 


272  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

therefore  not  surprising  that  as  it  had  to  build  ships  it  had  rapid 
reorganizations.  It  went  through  two  epochs  in  less  than  a  year, 
and  is  now  in  the  third.  The  first  epoch  may  be  called  the  epoch 
of  the  statesmen— men  of  wide  experience  and  generally  good 
judgment,  men  capable  of  deciding  policy,  but  who  had  not  had 
experience  in  carrying  out  these  policies.  The  second  epoch  was 
that  of  the  routine,  scientific  men — the  naval  constructors  who 
knew  scientific  and  technical  matters,  but  were  quite  inexperi- 
enced in  having  manufactures  according  to  these  plans  executed 
with  great  speed.  The  third  epoch  is  the  epoch  of  the  present, 
that  of  the  administrative  men,  the  men  who  do,  but  who  have 
never  had  much  opportunity  to  distinguish  themselves  in  science 
or  in  the  enunciation  of  national  policy,  but  who  have,  as  admin- 
istrators, done  things  and  done  them  quickly — the  epoch  of  Piez 
and  Schwab  and  the  experienced  shipbuilders. 

Upon  the  whole  the  career  of  the  Shipping  Board  stands  as  a 
clear  cut  example  of  the  great  importance  of  one  of  the  most 
lately  recognized  phases  of  scientific  management :  namely,  the 
scientific  employment  of  men — the  getting  of  the  right  man  for 
the  work  in  hand.  At  present  the  President  of  the  United 
States  is  one  of  the  largest  employment  managers  on  earth,  even 
for  purely  industrial  matters,  yet  most  employment  managers  are 
more  free  than  he  to  think  of  appointments  in  purely  business 
terms.  Indefinite  numbers  of  people  with  influence  try  to  get 
positions  for  their  friends,  from  or  through  the  President, 
chiefly  because  these  persons  are  their  friends.  All  this  is  hard 
for  a  President  or  any  one  else  to  resist.  Then,  too,  a  President 
is  also  the  head  of  a  party  and  he  can  not,  except  under  the 
most  unusual  circumstances,  entirely  disregard  the  political  ele- 
ment even  when  he  lays  his  hand  to  economic  matters.  In  gen- 
eral the  President  is  the  victim  of  a  system.  From  the  very 
nature  of  his  position  he  must  usually  keep  two  factors  in  mind, 
industrial  and  political,  even  when  making  an  industrial 
appointment.  The  Shipping  Board  illustrates  both  phases  of 
the  presidential  position,  the  usual  or  political  and  the  unusual 
or  nonpolitical.     It  began  in  1910  in  times  of  peace,  and  the 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       273 

President  felt  it  necessary  to  announce  the  politics  of  the  mem- 
bers. By  the  end  of  1917  after  some  months  of  war,  he  could 
and  did  appoint  without  regard  to  politics  and  wathout  their 
mention. 

After  the  war  was  on  the  Administration  had  the  advantage 
also  of  much  patriotic  service.  Men  of  large  experience  and 
proved  ability  gave  their  services  to  the  Shipping  Board  for 
nothing  or  for  what  was  to  them  a  pittance. 


Epoch  I.    The  Statesmen — January  to  July  24,  1917 

The  first  Shipping  Board  was  made  up  as  follows,  and  the 
qualifications  noted  are  briefed  from  the  announcement  quoted  in 
the  press  as  given  out  from  the  White  House  at  the  time  the  ap- 
pointments were  made.  The  announcement  as  widely  quoted  in 
the  press  had  every  man's  politics  immediately  after  his  name,  as 
below. 

1.  William  Denman,  Democrat,  San  Francisco,  six-year 
term,  lawyer ;  extensive  experience  in  admiralty  cases ; 
interested  in  the  question  of  an  American  merchant 
marine. 

2.  Bernard  N.  Baker,  Democrat,  Baltimore,  five-year  term, 
wide  experience  as  shipowner;  thirty  years  president  of 
Atlantic  transport  line  which  he  organized  and  operated. 

3.  John  A.  Donald,  Democrat,  New  York  City,  four-year 
term,  life-long  experience  in  steamship  business. 

4.  James  B.  White,  Republican,  Kansas  City,  three-year 
term,  well  known  lumberman;  gained  knowledge  of  ocean 
transportation  problems  of  the  United  States  through 
experience  as  an  exporter;  director  of  the  Yellow  Pine 
Lumber  Manufacturers  Association;  member  of  the 
Board  of  Governors  of  the  National  Lumber  Manufac- 
turers Association. 

5.  Theodore  Brent,  Progressive  Republican,  New  Or- 
leans, two-year  term;  lengthy  experience  in  railroad 
matters;  framing  rate  adjustments  brought  him  in  con- 
tact with  lake  and  coastwise  shipping;  general  manager 
of  the  Chicago  Lighterage  Co. 


27-i         INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

In  the  hands  of  this  group  of  men  two  tasks  were  placed. 
They  were  strangers  to  both  tasks.  The  tasks  themselves  were 
enormous  and  entirely  different  from  each  other :  first,  that  of 
managing  the  nation's  shipping  in  the  interests  of  the  nation; 
second,  that  of  building  the  nation's  shipping.  These  two  tasks 
have  no  more  relation  to  each  other  than  the  running  of  a  loco- 
motive works  has  to  the  running  of  a  railroad. 

The  Shipping  Board,  authorized  September  7,  1916,  was  or- 
ganized in  January,  1917,  with  the  admiralty  lawyer,  William 
Denman,  as  chairman.  Whereupon  Mr.  Bernard  N.  Baker,  vet- 
eran ship-operator,  promptly  resigned,  the  general  belief  being 
that  he  thought  he  should  have  been  chairman.  His  place  was 
filled  by  Raymond  B.  Stevens,  Democrat,  of  New  Hampshire, 
educated  as  a  lawyer,  but  reporting  himself  to  be  a  farmer.  His 
appointment  was  called  a  political  one  by  the  Marine  Reviczv  and 
other  papers,  and  the  words  "  lame  duck  "  were  used  in  con- 
nection with  his  name. 

One  of  the  first  official  acts  of  the  new  Board,  January  31,  was 
to  ask  the  President  to  make  a  proclamation  prohibiting  the  trans- 
fer of  vessels  from  American  to  foreign  flags.  He  issued  such 
a  proclamation  February  4.  The  Shipping  Board  enforced  it 
very  rigidly,  the  only  exceptions  being  a  few  special  vessels  built 
for  very  specific  foreign  service,  such  as  small  coasters  to  gather 
up  sugar  from  Cuban  outports,  collecting  it  at  the  main  ports, 
and  an  ice  breaker  for  the  harbor  of  Archangel. 

Late  in  February  the  Board  asked  Congress  for  power  to  com- 
mandeer ships  building  in  America  for  foreign  countries,  but 
such  permission  was  not  given  until  the  17th  of  June,  at  which 
time  the  board  was  in  the  throes  of  the  Denman-Goethals  con- 
troversy and  did  not  use  its  power  until  after  its  reorganization 
in  August. 

They  sought  and  obtained  from  Congress  power  to  control  the 
price  of  steel,  which  was  materially  reduced,  thereby  lessening 
the  cost  of  the  government  shipbuilding  program.  This  was  a 
great  advantage,  for  the  price  of  steel  was  still  left  at  a  level 
of  profiteering  price,  naturally  very  stimulating  to  production. 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       275 

The  Board  urged  upon  shipbuilders  the  gradual  adoption  of 
the  Diesel  engine,  an  internal  combustion  oil  burner  which  made 
great  saving  both  in  fuel  and  cargo  space,  and  by  having  a  round- 
the-world  fuel  radius  emancipates  the  user  from  the  dependence 
upon  foreign  coal,  so  that  our  hand  might  be  strengthened  in 
ocean  transportation  after  the  war.     This  was  merely  advice. 

More  important  than  any  of  these  minor  activities,  however, 
were  the  efforts  to  increase  shipbuilding  by  the  two  methods  of 
letting  contracts  and  actually  building  ships.  When  first  organ- 
ized the  Board  did  not  plan  to  build  ships.  They  had  other  plans 
for  their  fifty  million  dollars.  Within  a  short  time  there  arrived 
at  their  offices  almost  simultaneously  two  enthusiastic  and  re- 
sourceful mining  engineers,  Messrs.  Eustis  of  Boston,  and  Clark 
of  New  York.  They  were  accustomed  to  handling  materials  in 
quantity,  getting  things  done  in  a  hurry.  They  presented  a 
plan  of  shipbuilding  that  received  the  approval  of  the  Shipping 
Board.  Within  five  days  they  had,  by  telegraphic  summons, 
held  conferences  in  Washington  with  nearly  all  the  leading 
wooden  ship  builders  east  of  the  Pacific  Coast.  Conferences 
were  also  held  with  the  steel  ship  builders.  Out  of  these  con- 
ferences came  in  about  a  month  the  plan  for  the  fabricating 
plants  for  steel  ships.  The  much  advertised  wooden  ship  cam- 
paign was  an  immediate  result.  The  steel  ship  builders  were 
so  busy  with  long  time  contracts  and  so  far  behind  on  orders  and 
materials  that  they  held  out  little  hope  of  much  increase  in  out- 
put under  eighteen  months,  or  by  the  middle  of  1918.  In  the 
meanwhile  the  pressing  ship  shortage  of  the  spring  of  1918  was 
plainly  in  sight,  and  the  wooden  ship  builders  presented  plans 
whereby  they  could  enlarge  their  plants,  call  in  carpenters  from 
the  back  country,  and  get  immediately  to  work  if  the  government 
would  guarantee  enough  orders  to  make  them  safe.  This  the 
board,  acting  through  Messrs.  Denman,  Eustis,  and  Clark,  did 
and  did  promptly  up  to  the  full  extent  of  the  $50,000,000. 

The  type  of  ship  that  was  agreed  upon  for  many  of  the  wooden 
ship  contracts  was  a  duplicate  of  each  builder's  best  ship.  A 
little   later  the   Shipping  Board  adopted   a  very   simple   design 


276  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

known  as  the  Hough  type.  It  was  easy  to  build,  requiring  ship- 
builders only  at  the  bow.  The  rest  was  straight  work  which 
dry  land  carpenters  could  do. 

The  plan  of  the  Hough  wooden  ship  had  been  tested  by  sev- 
eral years  of  successful  service.  It  was  really  but  one  of  the 
builders'  best  ships.  The  contract  that  was  signed  was  the  long 
proved  navy  building  contract.  Many  men  went  to  work  get- 
ting their  yards  in  shape  because  they  were  told  that  they  would 
be  given  such  a  contract  a  little  later.  I  have  been  told  by  ship- 
builders that  Engineer  Clark,  who  was  working  for  $1  a  year, 
said  he  would  sign  contracts  for  ships  subject  to  the  money 
being  appropriated  by  Congress.  He  knew  that  such  action 
made  him  liable  for  jail,  but  he  considered  that  a  small  matter 
if  it  resulted  in  ships  being  built  in  that  time  of  need.  Builders 
were  willing  to  risk  it.      Really  the  risk  was  small. 

By  this  time  (March)  the  idea  for  fabricating  plants  for  steel 
ships  was  formulating,  the  submarines  were  succeeding  appal- 
lingly, and  the  Shipping  Board  was  ready  to  launch  out  on  a  huge 
scheme  of  contract  letting  and  steel  ship  building.  They  needed 
a  big  appropriation,  an  organization  for  quick  work  and  a  man 
of  large  executive  ability  to  carry  out  their  plans. 

The  Government  Forms  a  Holding  Company  to  Build  Ships 

It  is  interesting  to  observe  that  in  the  attempt  to  build  ships 
with  government  money  as  a  government  enterprise,  the  govern- 
ment adopted  the  old  constitution-beating,  legally  law-breaking 
but  very  convenient  device  of  big  business — namely  the  holding 
company.  The  United  States  Shipping  Board  created  under  the 
laws  of  the  District  of  Columbia,  April  IG,  1917,  an  ordinary 
corporation— the  Emergency  Fleet  Corporation,  of  which  the 
United  States  Government,  through  the  Shipping  Board,  held 
all  the  stock,  and  was  therefore  in  entire  control.  This  con- 
trol was  exercised  by  seven  trustees,  and  the  members  of  the 
Shipping  Board  were  trustees  of  the  Emergency  Fleet  Corpora- 
tion.    By  being  an  ordinary  private  corporation  it  was  clear  of 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       277 

all  the  red  tape  of  government  procedure;  the  delays  of  the 
civil  service,  and  the  bothers,  checks,  and  balances  of  govern- 
ment operation.  The  Shipping  Board  could  contract  with  its 
creature,  the  Emergency  Fleet  Corporation,  a  private  concern, 
just  as  it  could  also  contract  with  any  shipbuilder  for  a  boat,  or 
with  a  steel  mill  for  1,000  kegs  of  rivets.  The  steel  mill  made 
rivets  as  best  it  could ;  so  the  Emergency  Fleet  Corporation  was 
free  to  make  ships  as  best  it  could.  It  was  also  intended  that  it 
should  purchase  vessels  for  the  government  and  operate  them 
for  the  government,  but  its  main  function  was  to  build  ships. 


General  Goethals  Becomes  General  Manager 

Who  should  take  charge  of  the  Emergency  Fleet  Corporation 
to  execute  the  grand  program?  Here  a  weakness  of  govern- 
ment enterprise  showed  itself.  Experience  shows  that  war  has 
now  become  business,  enormous  business  requiring  the  largest 
and  most  thoroughly  organized  economic  enterprises  that  man 
has  yet  conceived.  Our  attempt  to  do  the  biggest  .thing  in  world 
industry- — build  ships  to  beat  the  submarine — shows  some  of 
the  difficulty  of  doing  such  a  work  through  the  electorate. 

To  build  ships  the  Emergency  Fleet  Corporation  had  to  have 
money,  a  lot  of  it  and  quickly.  To  get  money  it  had  to  make 
a  favorable  impression  on  Congress.  To  catch  congressional 
votes  they  virtually  drafted  Major  General  George  W.  Goethals, 
builder  of  the  Panama  Canal,  who  was  at  the  time  a  national 
hero  with  a  reputation  as  a  great  administrator.  The  General 
did  not  want  the  job,  said  he  did  not  know  anything  about  ship- 
building, but  they  almost  or  quite  forced  him  in,  got  a  half 
billion  dollar  appropriation,  after  which  the  shipping  program 
was  tied  up,  and  the  efforts  of  the  nation  were  blocked  for 
months,  chiefly  because  of  mistakes  in  personnel,  but  partly  also 
through  defective  type  of  organization. 

General  Goethals  was  made  general  manager  of  the  Fleet  Cor- 
poration. Mr.  Denman,  chairman  of  the  Shipping  Board,  was 
made  president  of  the  Fleet   Corporation.      This   arrangement 


278  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

seems  to  have  provided  a  condition  of  divided  responsibility,  and 
to  have  developed  friction  from  the  start.  The  general  manager 
was  appointed  by  the  Board,  and  was  virtually  responsible  to  the 
chairman.  After  two  reorganizations  of  the  Board,  the  by-laws 
were  changed.  November  24,  so  that  the  general  manager  became 
an  appointive  officer  responsible  directly  to  the  president  of  the 
Fleet  Corporation. 

In  Panama.  General  Goethals  had  been  a  dictator.  As  the 
Canal  neared  completion  he  had  been  made  Civil  Governor  of 
the  Panama  Canal  Zone,  which  means  in  effect  that  he  was  sov- 
ereign of  a  substantial  part  of  the  earth's  surface.  He  was  an 
army  officer,  where  discipline  and  responsibility  are  definite  and 
final,  and  where  things  had  to  be  done  according  to  an  estab- 
lished and  complicated  routine,  ill  adjusted  to  speed.  In  his  sol- 
dierly desire  and  efifort  for  perfection  there  was  a  natural  basis 
for  a  clash  with  the  civilian  engineers  Eustis  and  Clark,  who 
above  all  else  were  seeking  action,  speed,  with  the  least  possible 
red  tape.  In  maintaining  his  military  habit  of  responsibility  and 
line  authority,  .he,  the  chief,  had  to  sign,  see  and  pass  judgment 
upon  nearly  everything.  The  mass  was  too  great  for  the  sys- 
tem ^  to  produce  speed.  Nearly  everybody  had  to  see  the  Gen- 
eral, but  it  often  took  a  visitor  a  week  or  even  two  weeks  to  get 
up  to  his  desk.  Contracts  and  therefore  shipyards,  thousands 
of  men,  and  millions  of  dollars  worth  of  machines  waited  for 
weeks  until  Goethals  could  examine  the  details  of  the  contracts. 

The  first  contracts  had  been  signed  on  the  navy  contract  blank. 
General  Goethals  had  many  different  contracts  printed  before 
he  was  suited.  This  saved  money,  but  killed  speed.  We  needed 
speed  and  an  administrator  who  made  decisions  quickly,  picked 
out  competent  assistants  and  let  them  do  things.  Goethals  put  a 
great  ])aralysis  on  our  shipping  enterprise  because  he  could  not 
do  it  all  himself. 

Meanwhile,  shipbuilders  by  the  dozen  sat  around  Washington 
for  days  and  weeks,  waiting  for  contracts  that  they  had  fever- 

'  It  is  interesting  to  note  that  when  he  became  Quartermaster  General  he 
made  a  reputation  by  smashing  the  whole  complicated  red  tape  system  to  bits. 


SHIPBUILDING    IX    THE    UNITED    STATES,    1914    TO    1918       2Y9 

ishly  prepared  for  by  hiring  men  and  getting  equipment.  Not 
knowing  (so  he  said)  anything  about  ships,  General  Goethals 
adopted  the  Ferris  design  (see  Chapter  VIII)  and  stuck  to  it. 
He  held  up  a  lot  of  contracts^  that  had  already  been  let,  and 
ordered  men  to  build  the  Ferris  design,  which  it  was  desired  that 
everyone  should  build.  As  the  Ferris  design  was  essentially  an 
iron  ship  design  to  be  built  of  wood,  and  required  timbers  that 
could  not  be  found  in  all  the  East,  it  is  natural  that 'construction 
lagged,  the  enthusiasm  of  the  country  waned,  and  there  have  been 
idle  shipyards  in  the  United  States,  A.D.  1917  and  191S. 

To  further  complicate  matters  the  autocratic  general  found 
himself  subject  to  an  uncertain  extent  to  a  mere  civilian,  a  lawyer, 
his  junior  in  years.  For  months  the  press  of  the  country  fed  us 
with  the  details  of  the  Denman-Goethals  controversy,  as  to  what 
authority  each  had,  what  each  wanted  to  do,  who  was  boss,  who 
would  be  dismissed,  and  what  kind  of  ships  we  should  build. 
The  controversy  appeared  to  rage  around  the  question  of  ship- 
building material.  Should  the  ships  be  wood  or  steel,  yet  despite 
apparent  recrimination  on  this  subject,  both  men  showed  them- 
selves, by  their  final  testimony  and  by  the  contracts  they  signed, 
to  be  in  favor  of  both  wooden  and  steel  ships.  Thus  precious 
months  were  wasted. 

This  lamentable  controversy  left  us  two  misfortunes:  the  one 
the  delay  in  the  beginning  of  real  work,  and  the  other  the  diver- 
sion of  the  attention  of  the  United  States  from  real  constructive 
programs,  of  which  two  w^ere  most  imperative :  the  making  of  an 
army,  and  the  making  of  a  fleet.  Finally,  Engineers  Clark  and 
Eustis  published  the  whole  story  in  The  New  York  Times  (June 
8)  and  in  Sea  Power,  July,  1917,  and  the  President  settled  it 
shortly  afterward  by  asking  both  Denman  and  Goethals  to 
resign,  which  they  promptly  did,  July  24,  1917, 

During  the  latter  part  of  their  service,  after  June  17,  Messrs. 
Denman  and  Goethals  after  several  months  preparation  placed 
contracts  for  042,800  tons  of  steel  vessels,  and  let  or  agreed  upon 

^  Builders  were  ordered  to  stop  all  work  until  inspectors  were  on  the 
ground,  and  then  the  inspectors  were  not  sent  for  three  or  four  months. 


280  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

contracts  for  1,218,000  dead-weight  tons  of  wooden  ships,  and 
were  negotiating  for  one  hundred  more  of  350,000  dead-weight 
tons.  Thus,  within  forty  days  the  Shipping  Board  executed  con- 
tracts or  had  agreed  upon  contracts  for  a  production  of  tonnage 
equal  to  two-thirds  of  the  total  of  our  overseas  fleet  before  the 
war.  This  should  not,  however,  be  taken  as  too  great  an  achieve- 
ment when  we  consider  that  it  provided  directly  for  no  new  yards 
and  that  the  contracts  were  let  to  yards  already  many  months  or 
even  years  behind  in  orders.  However,  it  did  have  a  stimulating 
influence  because  the  large  amount  of  business  thus  definitely  in 
sight  enabled  private  owners  to  see  their  way  clear  to  finance 
enlargements,  especially  as  many  of  the  contracts  provided  for 
substantial  payments  as  the  work  proceeded.  These  advance  pay- 
ments, however,  worked  out  in  some  cases  to  be  a  real  detriment, 
because  so  much  was  paid  at  the  laying  of  the  keel  that  owners 
at  times  found  it  profitable  to  lay  a  keel,  take  the  payment,  and 
stop  for  a  few  months  while  devoting  their  time  to  other  work. 

Epoch  II.     The  Routine  Scientific  Men,  the  Men  of 
Knowledge — July  24  to  December  20,  1917 

Along  with  Mr.  Denman  went  his  supporter,  Mr.  Brent,  vice 
chairman  of  the  Board,  and  Mr.  White  had  resigned  on  account 
of  his  poor  health  a  few  days  before,  leaving  the  Board  reduced 
to  Mr.  Stevens,  the  farmer,  and  Mr.  Donald,  the  steamship 
operator.  The  influence  of  technical  requirement  is  evident 
in  the  next  appointees.  The  admiralty  lawyer  Denman  was  re- 
placed by  Edward  N.  Hurley  of  Chicago,  inventor,  and  also  busi- 
ness administrator.  He  had  originated  and  developed  the  pneu- 
matic riveter  and  other  pneumatic  machines  so  common  in  metal 
structural  work.  He  had  been  president  of  the  Standard  Pneu- 
matic Tool  Co.  of  Chicago  that  made  this  kind  of  apparatus.  He 
had  also  organized  the  Hurley  Machine  Co.  of  Chicago,  engaged 
in  the  manufacture  of  household  electric  appliances.  Three  years 
before  he  had  gone  to  Washington  as  a  member  of  the  Federal 
Trade  Commission,  and  had  served  there  two  vears.     He  had 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       281 

served  at  President  Wilson's  request  on  the  Red  Cross  War 
Ccuncil,  then  he  went  to  the  War  Trade  Board  where  he  lool^ed 
after  the  export  license  work.  He  was  a  proved  business  admin- 
istrator, but  there  was  no  shipbuilding  in  his  experience. 

This  field  of  knowledge  was  brought  to  the  Board  of  Rear 
Admiral  Washington  Lee  Capps,  chief  constructor  of  the  navy,  a 
master  of  the  art  of  ship  design,  a  scientist  of  unquestioned 
reputation.  For  years  he  had  been  chief  of  the  Bureau  of  Con- 
struction and  Repair  in  the  navy,  and  Secretary  Daniels  pointed 
out  the  fact  that  he  was  chief  constructor  from  1903  to  1910, 
when  our  navy  more  than  doubled  in  size,  and  the  majority  of 
the  present  fighting  vessels  of  the  navy  were  designed  by  him. 
He  had  been  sent  abroad  by  the  President  to  represent  the  gov- 
ernment in  international  maritime  conferences.  He  had  been 
decorated  abroad  for  his  scientific  achievements. 

This  brilliant  scientific  record  throws  no  light  whatever  on  the 
question  as  to  whether  or  not  the  distinguished  admiral  could 
build  tramp  ships  rapidly,  but  it  raises  the  inference  that  he  could 
not.  Perhaps  Charles  Darwin,  scientist,  could  have  run  a  stock 
farm  to  perfection;  perhaps  not.  Perhaps  Herbert  Spencer, 
philosopher,  would  have  made  a  good  university  president,  but 
there  was  no  real  reason  to  think  so.  In  fact  the  study  of  busi- 
ness administration  and  business  success  gives  us  abundant  reason 
to  believe  that  the  man  of  science,  the  extreme  technical  expert, 
is  by  the  mere  absorption  of  his  attention  to  those  fields  prevented 
from  having  or  having  had  time  to  develop  that  entirely  different 
ability — business  administration,  that  which  builds  ships  quickly. 
Business  judgment,  technical  skill,  and  scientific  attainment  are 
three  separate  and  nonrelated  things. 

A  man  may  be  an  excellent  technical  man,  capable  of 
doing  skilfully  his  definite  job,  but  woefully  short  on  this 
mysterious,  indefinite  thing  called  judgment.  It  is  amazing 
how  frequently  we  make  the  mistake  of  putting  the  technical 
man  in  the  place  where  he  must  use  the  power  he  does  not 
have.  For  example,  a  common  type  of  corporation  is  that 
which  is  built  around  the  inventor.     He  has  evolved  by  his 


282  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

mental  processes  and  handiwork  a  new  machine.  At  this 
point  some  capitalists  form  a  company  to  manufacture  this 
machine  and  put  the  inventor  in  charge  of  the  plant.  _    _    ■ 

Failures  that  waste  the  nation's  substance  by  the  millions 
a  year  arise  from  this  type  of  error.  It  is  always  a  grave 
risk  to  put  any  man  in  charge  of  any  kind  of  work  that  he 
has  not  done ;  and  a  successful  corporation  will  place  a  man 
in  charge  of  work  that  he  really  knows,  and  will  not  try 
to  make  him  learn  in  large  scale  operations  something  he 
knows  not — as  happens  when  a  technical  man  is  suddenly 
put  in  charge  of  administrative  work.^ 

The  very  excellent  and  distinguished  master  of  battleship  de- 
sign. Admiral  Capps,  and  also  the  similarly  distinguished  Ad- 
miral Harris  who  succeeded  him  for  the  space  of  two  weeks  and 
six  days  between  December  1  and  20,  1917,  proved  that  there 
is  no  necessary  connection  between  the  ability  to  design  a  battle- 
ship and  to  build  an  unprecedented  quantity  of  freighters  in  a 
short  time.  These  gentlemen  were  face  to  face  with  a  problem 
they  had  never  seen,  and  for  which  their  experience  instead  of 
fitting  them  had  unfitted  them.  With  plenty  of  money,  with  no 
regard  for  costs,  but  a  sharp  regard  for  waste,  they  had  stood 
as  watchdogs  over  private  concerns  to  see  that  they  built  battle- 
ships, built  them  nicely,  according  to  specifications  which  they 
had  themselves  drawn  at  great  leisure.  Then,  too,  they  were 
versed  and  had  for  years  been  enmeshed  in  the  great  official  rou- 
tine of  red  tape  by  which  it  sometimes  takes  four  days  to  com- 
municate with  the  man  in  the  next  room,  because  you  can  only 
reach  him  officially  by  going  to  your  first  superior  officer,  thence 
to  your  second  superior  officer,  thence  to  your  third  superior  of- 
ficer, and  from  him  to  the  next  door  man's  third  superior  officer, 
thence  to  his  second  superior  officer,  thence  to  his  first  superior 
officer,  and  thence  to  him,  which  may  take  four  days  or  two 
weeks.  This  is  possibly  necessary  for  the  long  run  of  govern- 
ment expenditure.  It  provides  for  safety.  It  is  the  duplicate 
of  the  wonderful  system  of  checks  and  balances  in  our  federal 
government  which  protects  things  as  they  are  and  makes  any 

'  J.  Russell  Smith:  The  Elements  of  Industrial  Management,  p.  47. 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    191S       2S3 

action,  right  or  wrong,  so  nearly  impossible.  It  has  caused  dur- 
ing the  period  of  the  war  the  essential  overturning  of  the  consti- 
tution in  the  Overman  bill  which  makes  the  President  an  autocrat 
for  the  period  of  the  war.  This  followed  the  creation  of  an 
entirely  new  extra  departmental  government  ^  which  is  conducting 
much  of  the  nonmilitary  enterprise  of  the  war  and  of  which  the 
Shipping  Board  with  its  holding  corporation  is  one  of  the  best 
examples. 

The  other  members  of  the  new  Shipping  Board,  in  addition  to 
Messrs.  Hurley,  Donald,  and  Stevens,  were  Charles  R.  Page, 
San  Francisco,  who  had  spent  his  entire  life  in  the  marine  insur- 
ance business,  with  the  exception  of  six  months  which  he  spent 
with  a  firm  of  shipowners,  and  Bainbridge  Colby,  who  had  prac- 
ticed law  in  New  York  since  1892  and  had  been  one  of  the 
founders  of  the  Progressive  national  party. 

The  new  Board  organized  wuth  Mr.  Hurley  as  chairman.  He 
also  became  president  of  the  Emergency  Fleet  Corporation  with 
Admiral  Capps  as  general  manager. 


Requisitioning  and  Commandeering  of  Unfinished  Vessels 

As  mentioned  above,  President  Wilson  had  conferred  upon 
the  Shipping  Board,  by  an  order  of  July  15,  the  authority  to 
commandeer  all  foreign  vessels  under  construction  in  the  United 
States.  By  an  order  issued  on  August  3,  the  Board  took  advan- 
tage of  this  authority.  Not  only  were  the  foreign  vessels  com- 
mandeered, but  also  all  vessels  under  construction  for  Americans 
were  requisitioned.  They  were  requisitioned  under  two  schemes. 
By  the  first  scheme  the  Shipping  Board  paid  to  the  owners  of  the 
vessels  the  amount  that  they  had  already  expended  for  construc- 
tion. The  contract  was  then  taken  over  and  all  future  payments 
were  made  by  the  Shipping  Board  to  the  shipbuilding  company. 
Under  the  second  scheme  the  Shipping  Board  agreed  to  return 
the  ships  to  the  original  owner  at  the  end  of  the  war,  or  when 

'  Including  the  Shipping  Board,  Fuel  Administration,  War  Industries 
Board,  War  Trade  Board  and  central  statistical  organization. 


284  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

completed,  provided  the  owner  reimbursed  the  government  for 
its  expenditures  and  agreed  to  operate  the  vessel  under  the 
Shipping  Board's  requisition  program. 

The  domestic  vessels  were  requisitioned  for  three  reasons: 
first,  in  order  that  construction  might  be  speeded  up  by  the  gov- 
ernment; second,  in  order  that  additional  tonnage  might  be  se- 
cured for  government  needs;  and  third,  to  decrease  the  freight 
charges  on  shipments  to  Europe.  The  new  organization  con- 
tinued the  previous  program  of  letting  contracts  for  ships  to  be 
built  in  private  yards  and  let  contracts  for  additional  tonnage, 
both  wooden  and  steel,  although  the  wooden  ship  contracts  have 
been  decreasing  in  number  because  of  the  scarcity  of  timber. 
According  to  Mr.  Hurley's  testimony  before  the  Committee  on 
Commerce  of  the  United  States  Senate,  the  Shipping  Board  con- 
trolled on  December  21,  1917,  work  in  132  yards,  58  of  which 
were  old  yards  and  74  new  yards,  created  since  January  1,  1917. 
Twenty-two  of  the  old  yards  were  building  only  vessels  which 
had  been  requisitioned  by  the  shipping  board. 

Four  forms  of  contracts  for  building  ships  have  been  used  by 
the  Shipping  Board  as  follows : 

1.  The  lump-sum  contract. 

2.  The  cost-plus  contract  with  guaranteed  fee. 

3.  The  cost-plus  contract  with  sliding  scale  fee. 

4.  The  agency  contract. 

By  far  the  greater  number  of  contracts  have  been  let  under  the 
first  class. 

The  Building  of  New  Shipyards 

The  new  yards  have  been  built  under  three  general  schemes : 

1.  Private  companies  have  built  yards  entirely  with  their  own 
capital ; 

2.  Private  companies  have  built  yards  with  capital  loaned  to 
them  by  the  United  States  Government  and  advanced  on  con- 
tracts for  the  building  of  ships ; 

;3.  Private  companies  have  built  yards  for  the  United  States 
Government.     Under  this  form  of  contract  the  Shipping  Board 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       285 

has  furnished  materials  and  labor,  and  the  company  has  fur- 
nished the  organization  and  technical  knowledge.  The  yard  is 
the  property  of  the  Shipping  Board.  Hog  Island  is  an*  example 
of  the  last  scheme,  as  are  the  two  other  so-called  government 
yards. 

These  three  large  assembling  plants  now  being  constructed  are 
(1)  Hog  Island,  Philadelphia,  the  American  International  Ship- 
building Corporation;  (2)  Bristol,  Pa.,  the  Merchants  Shipbuild- 
ing Corporation;  and  (3)  Newark,  N.  J.,  the  Submarine  Boat 
Company.  The  method  is  well  illustrated  by  the  chief  points  of 
the  contract  with  the  American  International  Shipbuilding  Cor- 
poration for  the  yard  at  Hog  Island. 

The  American  International  Shipbuilding  Corporation  is  a 
subsidiary  corporation  of  the  American  International  Corpora- 
tion. It  was  formed  for  the  purpose  of  constructing  the  Hog 
Island  yard,  and  building  ships  for  the  government.  In  May, 
1917,  the  United  States  Government  through  the  Shipping  Board 
invited  the  American  International  Corporation  to  undertake  the 
construction  of  a  shipyard  to  contain  50  ways  and  to  build  therein 
a  fleet  of  200  cargo  vessels  of  an  aggregate  tonnage  of  1,500,000 
tons.  Early  in  July  the  American  International  Corporation  had 
prepared  plans  satisfactory  to  the  Emergency  Fleet  Corporation 
and  had  agreed  upon  the  essentials  of  the  contract  under  which 
the  work  was  to  be  done.  It  was  expected  this  work  would  begin 
August  1  or  before.  This  agreement  provided  for  the  forma- 
tion of  the  operating  company,  the  American  International  Ship- 
building Company,  all  of  whose  acts  and  undertakings  were  guar- 
anteed by  the  American  International  Corporation,  which  was 
then  ready  to  begin  immediately  the  w^ork  of  constructing  the 
shipyard.  Negotiations  were  interrupted  by  the  Denman- 
Goethals  controversy  and  the  resignation  of  both  of  these  gentle- 
men. But  immediately  upon  the  appointment  of  Admiral  Capps 
they  were  resumed  and  continued  with  astounding  leisure.  After 
the  loss  of  two  and  one-half  months  of  the  best  working  time 
of  the  year,  the  contract  was  awarded  on  September  13,  1917, 
and  the  American  International  Shipbuilding  Corporation  was 


286         INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

instructed  to  proceed.  Work  of  building  the  shipyard  at  Hog 
Island,  the  largest  shipyard  in  the  world,  began  immediately. 
Under  the  contract  of  the  American  International  Corporation 
with  the  Shipping  Board,  the  Shipping  Board  agreed  to  pay  for 
the  necessary  materials  and  labor  for  the  construction  of  the 
shipyard.  The  Corporation  purchased  the  land  at  a  cost  of  about 
$2,000  per  acre,  and  agreed  that  the  government  should  have  the 
option  of  taking  over  this  land  at  the  same  price  plus  any  pay- 
ments that  were  made  in  the  form  of  taxes,  etc.,  to  the  State  of 
Pennsylvania  or  the  city  of  Philadelphia.  The  Shipping  Board 
also  agreed  to  pay  for  materials  and  labor  used  in  the  construc- 
tion of  the  vessels,  the  shipbuilding  corporation  furnishing,  as  its 
share,  only  the  organization,  i.e.,  the  know-how.  Certain  of  the 
executive  officers  of  the- corporation  were  not  paid  by  the  govern- 
ment, but  were  paid  by  the  corporation  itself.  As  compensation 
for  the  building  of  the  3^ard,  and  the  building  of  the  ships,  a  fee 
amounting  to  about  six  million  dollars  ^  is  to  be  paid  to  the 
shipbuilding  company,  on  a  contract  calling  for  total  payments 
of  approximately  $165,000,000.  In  case  the  vessels  are  finished 
at  a  lower  cost  than  the  estimated  cost,  the  surplus  is  to  be 
divided  equally  between  the  Emergency  Fleet  Corporation,  the 
American  International  Shipbuilding  Corporation,  and  the  em- 
ployes. Premiums  are  also  offered  for  the  early  delivery  of  the 
vessels,  which  can  not  exceed  $14,000  apiece  for  cargo  vessels, 
and  $17,500  for  troop  vessels.  If  the  corporation  fails  to  live 
up  to  its  contracts,  a  certain  amount  of  the  $6,000,000  fee  is  to 
be  deducted  as  a  penalty.^ 

Rise  of  Public  Dissatisfaction 

By  November  the  Board  had  let  many  contracts,^  but  the 
country  was  getting  very  restive  under  the  nonappearance  of 
ships,  and  the  general  slow  progress  of  actual  work  following 

'  This  figure  sounds  large  and  resulted  in  newspaper  criticism,  but  it  was 
a  cheap  investment  if  it  furnished  good  administrative  experience,  for  tliis  is 
a  commodity  the  government  did  not  have,  and  which  money  can  not  make. 

^  Testimony  before   Senate  Committee  on   Commerce,  pp.  241,  243. 

'The  construction  of  a  great  fleet  of  vessels  of  8,800  tons  or  over  was  one 
of  the  first  steps  advocated  by  Chairman  Hurley,  of  the  Shipping  Board,  and 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    191S       2S7 

the  Denman-Goethals  episode.  The  leisurely  delays  and  the  red 
tape  departmental  methods  of  Rear  Admiral  Capps'  administra- 
tion of  the  Fleet  Corporation  convinced  the  majority'  of  thought- 
ful people  that  something  was  the  matter,  and  it  began  to  be 
discovered  that  we  were  still  trying  to  do  administrative  work 

Rear  Admiral  Capps.  The  theory  was  that  these  vessels  could  attain  higher 
speed  and  be  more  effective  against  the  submarines.  Vessels  for  use  as 
transports  are  being  constructed  with  a  new  system  of  bulkheads,  which,  it 
is  believed,  will  make  them  "  unsinkable."  It  has  been  stated  that  at  least 
three  hits  would  have  to  be  made  by  torpedoes  to  cause  a  disaster,  and 
under  the  present  system  of  convoy  such  a  feat  by  a  submarine  is  looked  upon 
as  impossible. 

The  following  table  shows  the  number  of  vessels  under  contract,  pending 
contract  and  requisitioned  by  the  Emergency  Fleet  Corporation : 

Total  Dead-weight 
Type  of  Vessel  No.  of  Vessels  Capacity 

Wood  375  1,330,900 

Composite  58  207,000 

Steel  451  3,186,400 

Totals  contracted  for   884  4,724,300 

Contracts  pending   99  610,000 

Totals    983  5,334,300 

Totals  requisitioned  (all  types)   .         *  426  3,029,508 

Grand  totals 1,409  8,363,808 

*  This    total    includes    requisitioned    vessels    complc  ^d    and    released — 33 
vessels ;  257,575  tons. 

The  884  vessels  contracted  for,  exclusive  of  contracts  pending  for  ninety- 
nine  vessels,  and  also  exclusive  of  requisitioned  vessels,  are  to  be  as  follows : 

Dead-weight 

Type  of  Vessel                                         No.  of  Vessels  Tonnage 

Cargo  411  1,438,500 

4,000  tons 16  64,000 

4  700  •'       12  56,400 

5'000  '•   160  800,000 

6,000     "      7  42,000 

7.500  tons  and  under   76  569,200 

8,800  tons 54  475,200 

9  000     "         .              44  396,000 

lOioOO     "      •. 34  323,000 

Totals    814  4,164,300 

Cargo  and  transport: 

8,000  tons   70  560,000 

Grand  totals  884  4,724,300 

The  vessels  under  requisition,  all  of  which  are  of  steel  construction  and 
which  are  exclusive  of  those  delivered  and  released,  are  as  follows : 


2S8  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

with  few  experienced  administrators  or  shipbuilders.^  With  the 
coming-  of  winter  the  red  tape  scientist  era  of  the  Fleet  Corpora- 
tion went  out  under  a  fire  of  public  indignation  and  hostile  con- 
gressional criticism  and  investigation.  The  stages  in  its  passing 
were  as  follows. 

On  the  31st  of  October,  Chairman  Hurley  received  a  letter 
from  the  Atlantic  Coast  Shipbuilders  Association,  calling  his 
attention  to  the  fact  that  up  to  the  present  time  shipbuilders  had 
not  been  accorded  proper  opportunity  of  offering  their  experience 
and  cooperation  to  the  government.  They  proposed  that  they 
appoint  a  permanent  committee  of  shipbuilders  to  confer  with  the 
Shipping  Board,  and  other  departments  of  the  government  with 
regard  to  five  subjects  "  which  were  the  basis  of  a  conference 

Dead-weight 
No.  of  Vessels  Tonnage 

Colliers    9  64,500 

Passenger  and  cargo  9  43,558 

Tankers    58  565,155 

Cargo  317  2,098,720 

Totals 393  2,771,933 

Grand    totals    requisitioned    and 

under  contract 1,277  7,496,233 

The  requisitioned  vessels  completed  and  released  are  as  follows : 

Colliers  1  12,650 

TaJikers    i  10,475 

Orecarriers    7  73  760 

Cargo    24  160^690 

Totals  S3  257,575 

Philadelphia  Public  Ledger,  November  27,  1917. 
'  The  connection  of  the  Board  with  men  of  experience  was  not  ahvavs 
satisfactory.  Designer  Ferris  was  selected  because  of  his  great  experience 
as  ship  designer  He  designed  a  type  wooden  ship  of  questionable  merit, 
but  of  which  400  were  ordered.  Mr.  Ferris's  connection  with  certain  ship- 
building contracts  created  much  unfavorable  comment  among  Senators  (see 
testimony  of  January  25,  1918)  and  the  public,  and  was  soon  followed  by 
his  resignation.  Of  the  many  able  men  who  served  the  Shipping  Board  he 
was  the  only  one  who  took  a  salary  ($30,000  a  year)  commensurate  with  his 
civilian  earnings.  » 

Coast  ^"    ^''J"**'"^"*  ^"^  standardization  of  shipyard  wages  on  the  Atlantic 

2     Collection,  distribution   and   regulation   of   labor   for  emergency   ship- 
building and  increasing  the  efficiency  of  labor  ^    ^    f 
materi^r^"    '"^^''°'^'    °^    ordering,    priority    and    delivery    of    shipbuilding 

Un1teH^sTJ!.?^r"    ':'"d„cooP^'-^tion    by    the    United    States    Navy    and    the 
Lnited  States  Shipping  Board  with  the  Atlantic  Coast  builders. 

5.    Iiquitable  policy  for  the  adjustment  of  unfinished  shipbuilding  contracts 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       289 

that  day  between  the  Shipping  Board  and  one  hundred  ship- 
builders who  had  l>een  invited  to  Washington.  Before  this  com- 
mittee was  appointed,  however,  the  Society  of  Naval  Architects 
and  Marine  Engineers  met  in  New  York  and  sent  to  the  Presi- 
dent of  the  United  States,  November  19,  1917,  a  petition  which 
by  its  mere  statement  of  fact  was  almost  denunciation,  for  it 
said : 

Whereas,  At  the  present  time  no  experienced  builder  of 
merchant  ships  occupies  any  position  where  the  counsel  of 
such  men  is  heard  in  the  decision  of  national  policies,  while 
other  important  industries  are  now  represented  by  the  rec- 
ognized experts;  be  it  therefore. 

Resolved,  That  the  Society  of  Naval  Architects  and 
Marine  Engineers,  at  its  twenty-fifth  assemblage  in  the  city 
of  New  York,  on  November  IG,  most  respectfully  and  ur- 
gently petitions  the  President  of  the  United  States  of  Amer- 
ica to  appoint  as  a  member  of  the  Council  of  National  De- 
fense a  representative  builder  of  merchant  ships  who  shall, 
by  reason  of  his  experience,  ability,  and  business  vision,  be 
qualified  to  sit  in  the  high  councils  of  that  most  important 
body. 

Stevenson  Taylor, 
Lieutenant  Commander  U.S.N.R.F., 
President,  Society  of  Naval  Architects 

and  Marine  Engineers. 

The  previous  week  the  following  illuminating  dialogue  occurred 
before  a  Senatorial  committee  which  was  quizzing  Mr.  Homer 
Ferguson,  once  naval  architect  of  the  United  States  Navy,  and 
then  president  of  the  Newport  New^s  Shipbuilding  Company, 
operating  the  largest  shipyard  in  America : 

Senator  Martin :  "  Would  the  program,  in  your  opinion, 
have  moved  any  faster  if  a  practical  shipbuilder,  in  the  first 
place,  had  been  put  in  as  general  manager  of  the  Fleet 
Corporation?  " 

"  Yes,"  Mr.  Ferguson  replied.  "  So.  far  as  I  know  this 
is  the  first  time  since  the  program  was  put  under  way  that 

to  conserve  the  interest  of  shipbuilders  and  the  United  States  Shipping 
Board."      (Philadelphia  Pxiblic  Ledger,  October  31,   1917.) 


290  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

a  practical  shipbuilder  was  ever  asked  officially  for  his  ad- 
vice or  suggestions  as  to  shipbuilding." 

At  the  time  Rear  Admiral  Capps  resigned  as  general  manager 
of  the  Fleet  Corporation,  Mr.  Ferguson  was  asked,  he  said,  to 
take  the  place,  but  when  he  found  he  would  be  given  no  authority 
he  declined. 

In  connection  with  Mr.  Ferguson's  attitude  toward  this  posi- 
tion, attention  should  be  called  to  the  confusions  of  authority 
that  entered  into  the  Denman-Goethals  trouble,  and  also  to  the 
above  mentioned  change  in  the  organization  of  the  Fleet  Cor- 
poration. 

These  very  direct  civilian  requests,  in  combination  with  the 
revelations  of  the  nonexpert  character  of  the  personnel,  and  the 
unsatisfactory  state  of  affairs,  produced  prompt  results,  not,  how- 
ever, in  the  arrival  of  the  shipbuilder,  but  in  the  appointment, 
November  15,  of  Mr.  Charles  Piez  as  vice  president  of  the  Emer- 
gency Fleet  Corporation,  to  have  charge  of  actual  construction 
of  the  vessels  and  to  speed-up  of  delivery  of  materials.  Nine 
days  later  came  the  amendment  of  the  by-laws,  making  the  gen- 
eral manager  the  appointee  of  the  president  of  the  Emergency 
Fleet  Corporation.  A  few  days  later  Admiral  Capps,  pleading 
ill  health,  resigned,  although  it  was  generally  supposed  that  the 
change  in  the  by-laws  on  one  side,  and  the  appointment  of  Mr. 
Piez  on  the  other  side  had  made  his  position  less  agreeable. 

Admiral  Harris  Becomes  Manager 

Not  yet  convinced  of  the  inefficacy  of  the  technical  rather  than 
the  administrative  expert.  Rear  Admiral  Frederick  R.  Harris,  of 
the  navy,  was  immediately  appointed  to  succeed  Admiral  Capps 
as  the  general  manager,  although  Admiral  Harris  had  had  noth- 
ing more  to  do  with  ships  than  the  designing  of  water  front 
construction  work:  namely,  dry  docks,  shops,  terminal  wharves, 
floating  dry  docks,  shipl)uilding  ways.  He  had  not  been  even  a 
naval  constructor,  but  had  had  charge  of  the  navy's  construction 
work  on  shore.     He  resigned'  December  20,  giving  as  a  cause  the 


SHIPBUILDING    IN- THE    UNITED    STATES,    1914    TO    1918       291 

carrying  of  matters  by  his  subordinates  over  his  head  to  his 
superiors,  which  had  occurred  at  the  request  of  officers  of  the 
Shipping  Board. 

Red  Tape  and  tJie  Industrial  Troubles  of  Democratic 
Socialism 

It  may  be  said  in  favor  of  the  red  tape  scientist  administration 
of  Messrs.  Capps  and  Harris  that  by  their  care  and  scrutiny  of 
contracts  they  saved  the  country  some  money.  One  estimate 
gives  the  amount  as  $15,000,000  out  of  a  total  of  $300,000,- 
000.  This  money  of  course  had  a  certain  value,  but  in  saving 
it  they  lost  invaluable  time.  In  the  words  of  a  conservative 
publicist  of  national  reputation,  writing  at  the  time  of  the  pass- 
ing Admiral  Capps : 

The  actual  record  of  the  Shipping  Board  is  something 
appalling  and,  if  it  were  narrated  without  fear  or  favor, 
would  afford  a  warning  so  impressive  that  it  should  be 
heeded.  There  is  a  kind  of  board  that  would  not  heed  any 
warning,  where  bureaucratic  habits  and  red  tape  rules 
have  been  allowed  to  have  sway  for  many  years.  The  Ship- 
ping Board  has  almost  completely  wasted  not  less  than 
seven  months  of  invaluable  time.  Building  arrangements 
which  were  far  advanced  four  or  five  months  ago  have  been 
canceled.  Contracts  completed  and  ready  for  signature 
were  held  up  for  three  months  in  order  that  Admiral  Capps 
might  minutely  examine  and  debate  the  innumerable  details 
of  the  contracts.  It  seemed  more  important  to  .  .  .  officials 
that  every  little  detail  of  the  contract  should  be  made 
microscopically  accurate  and  in  the  best  form  than  that  the 
country  should  have  ships  when  it  needs  them.  The  whole 
record  is  one  of  imbecility,  by  a  board  containing  a  consid- 
erable number  of  really  able  and  patriotic  men,  and  it  throws 
one  brilliant  light  on  governmental  action.  It  does  not  prove 
that  the  government  can  never  do  better  than  that,  but,  in 
my  judgment,  the  severe  "  let  alone  "  policy  would  have 
given  us  more  ships  than  we  thus  far  have  promise  of  and 
would  have  given  them  far  more  quickly  than  we  shall  get 
them.  .  .  .  No  patriotic  American  citizen  could  possibly 
know  the  facts  without  a  great  deal  of  feeling  against  a 


292  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

system  which  would  make  such  things  possible.  If  the  war 
should  be  won  with  grave  difficulty  and  require  an  extra 
year  of  fighting,  it  would  be  due  as  much  to  these  series  of 
events  as  to  anything  else. 

Some  of  these  contracts  that  were  thus  held  up  for  the  minute 
scrutiny  customary  in  the  building  of  battleships  in  times  of  peace 
were  for  nothing  less  than  the  great  fabricating  plants  with  which 
America  had  boasted  she  would  save  the  day  for  the  Allies  by 
building  ships  at  a  speed  never  before  seen.  There  is  no  doubt 
also  that  for  the  first  four  months  after  the  government  com- 
mandeered the  vessels  in  progress,  there  were  less  ships  built 
than  would  have  been  the  case  had  the  builders  been  let  alone. 
The  yards  were  busy  working  on  contracts  for  private  parties, 
said  contracts  having  been  made  in  many  cases  a  long  while 
before  under  conditions  of  lower  priced  labor,  more  abundant 
and  cheaper  materials.  In  many  cases  the  builders  stood  to 
lose  on  the  completion  of  some  of  the  contracts.  Naturally  they 
hesitated  about  pushing  them  as  vigorously  as  they  would  push 
other  contracts  that  were  on  a  better  price  basis.  This  problem 
liad  arisen  in  England  and  been  settled  by  the  shipowners  com- 
ing forward  with  more  money  to  enable  the  shipbuilders  to  meet 
the  new  conditions,  and  in  this  country  private  owners  had  been 
glad  to  do  the  same  thing  and  were  doing  it  right  along.  But 
with  the  government,  it  was  dififerent.  The  Shipping  Board 
found  a  company  working  slowly  on  a  certain  contract  and  pro- 
ceeded in  bureaucratic  fashion  to  hold  them  up  tight  to  that 
contract.  If  it  involved  loss,  that  made  no  difference.  It  was 
up  to  the  shipbuilder.  He  had  made  the  contract  and  must  live 
up  to  it.  If  he  lost  money,  that  was  his  look-out.  This  forced 
the  yards  to  work  slowly,  to  do  their  work  as  cheaply  as  they 
could.  Various  students  agree  that  up  to  December  at  least,  the 
commandeering  process  by  the  Shipping  Board  had  resulted  in 
less  ships  rather  than  more  ships,  as  we  had  so  enthusiastically 
hoped. 

As  had  been  the  case  in  England,  also  in  America  there  arose 
the  charge  of  needless  change  in  specifications  of  ships,  of  which 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1018       293 

there    was    much    under    both    General    Goethals    and    Admiral 
Capps. 

The  coming  of  winter  found  the  government's  great  ship- 
yards in  the  beginning  stages  of  construction.  The  giant  yard 
at  Hog  Island,  Philadelphia,  was  still  but  a  great  morass,  with 
men  wading  around  in  the  freezing  mud  into  which  they  were 
driving  piles  by  the  tens  of  thousands,  upon  which  were  to  come 
later  the  fifty  ways  of  the  world's  greatest  shipyard. 

When  we  consider  that  this  was  December,  1917,  we  must  ac- 
cept this  spectacle  as  a  partial  measure  of  the  difficulty  of  achieve- 
ment by  government  in  a  democracy.  We  can  blame  the  Ad- 
mirals for  three  or  four  months  of  delay  while  they  discussed  the 
details  of  contracts.  We  can  lament  that  General  Goethals 
stopped  the  speedy  work  of  Eustis  and  Clark.  President  Wilson 
is  responsible  for  a  share  of  the  delay.  It  may  be  advanced  in 
general  defense  of  the  Administration  that  the  President  had 
asked  Congress  in  19 IG  and  in  1915  for  the  creation  of  a  Ship- 
ping Board  with  the  power  to  build  ships,  but  there  is  no  getting 
around  the  fact  that  the  ultimate  responsibility  for  months  of 
delay  in  shipbuilding  comes  back  directly  and  solely  to  the 
President,  for  it  is  true  that  when  Congress  finally  did  give  him 
his  Shipping  Board,  September  7,  1917,  it  was  four  months  be- 
fore that  Board  had  even  gone  through  the  formality  of  organ- 
izing. He  could  have  organized  it  in  seven  days.  Further  than 
that,  when  it  convened,  it  could  have  had  well  matured  plans 
ready  to  execute,  for  there  was  plenty  of  talent  in  the  country 
that  would  have  been  glad  to  confer  with  the  President  months 
in  advance  in  the  anticipation  of  a  Shipping  Board  and  the 
starting  of  the  government's  shipbuilding  policy,  so  that  plans 
could  have  been  ready  to  launch  almost  as  a  ship  from  the  ways. 
This  indeed  was  exactly  what  was  done  in  the  Food  Administra- 
tion. It  was  organized  and  at  work  for  weeks  while  Congress 
debated  on  the  bill  giving  it  power  and  money.  Thus,  even 
with  the  congressional  action  delayed  as  it  was,  we  might 
have  been  almost  twelve  months  further  along  with  at  least  one 
government   fabricating  shipyard.      But  it  is  scarcely   fair   for 


294  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

anyone  even  in  retrospect  to  censure  the  President.  It  goes 
rather  to  the  presidency.  The  President  must  follow  public  opin- 
ion. It  is  most  difficult  or  indeed  impossible  to  say  what  public 
opinion  was  in  the  autumn  of  1916.  Perhaps  the  President  read 
it  aright — perhaps  he  did  not.  So  we  may  push  responsibility  for 
our  delay  in  starting  shipbuilding  farther  back  even  than  the 
President — to  the  American  people.  It  is  difficult  for  a  great 
electorate  to  understand  world  politics.  It  is  possibly  true  that 
this  nation  reelected  Wilson  in  1916  because  he  "  had  kept  us  out 
of  war."  But  after  war  was  declared  we  did  not  take  it  se- 
riously. Men  of  national  reputation  advertised  boldly  for  the 
continuance  of  "  business  as  usual."  Most  of  our  press  main- 
tained more  or  less  of  the  same  point  of  view,  for  more  than  a 
year.  As  a  people  we  failed  to  heed,  and  therefore  as  a  govern- 
ment we  failed  to  act  on  the  potent  policy  described  in  the  wise 
words  of  Mr.  Bainbridge  Colby  of  the  Shipping  Board,  address- 
ing an  audience  in  the  Philadelphia  Academy  of  Music,  January, 
1918,  after  his  return  from  Europe  with  Colonel  House. 

This  country  is  in  danger.  I  tell  you,  it  is  in  danger. 
We  must  put  the  ships  on  the  ocean,  or  this  war  is  lost. 
Nothing  should  stand  in  the  way  of  shipbuilding.  There 
shouldn't  be  a  skyscraper  built  in  this  country,  not  a  rivet 
should  be  driven  into  a  bridge,  not  a  girder  placed  in  a 
tunnel.  Every  automobile  ought  to  be  taken  from  the 
streets  and  every  chauffeur — and  all  of  them  are  good  me- 
chanics— should  be  sent  by  their  employers  into  the  ship- 
yards. 

No  candy  should  be  manufactured,  no  athletic  goods 
should  be  made  or  an  automobile  turned  out;  we  should 
do  nothing  of  this  sort,  but  build  ships,  ships,  ships. 

As  a  measure  of  our  failure,  we  made  700,000  pleasure  auto- 
mobiles in  1917,  and  are  still  at  it  May,  1918,  after  the  Ger- 
man drive  on  Amiens. 

In  January,  1918,  our  attention  was  called  to  a  specific  meas- 
ure of  delay — the  fact  that  the  six  months  needed  for  a  ship- 
ping miracle  that  had  sounded  so  sweet  in  our  ears  the  previous 


SHIPBUILDING    IN    THE    UNITED    STATES,    lOl-i    TO    1918       295 

summer,  had  passed  and  the  miracle  had  not  come.  The  miracle 
was  Chairman  Denman's  proposal  of  a  contract  with  a  bridge 
company  which,  after  six  months  preparation,  would  launch  a 
5,000  ton  ship  every  working  day  as  long  as  desired.  ^  The 
money,  $750,000,000,  was  appropriated,  but  the  ships  did  not 
come  forth. 

Enlargements  of  Private  Yards  in  the  United  States 

While    the    Emergency    Fleet    Corporation    under    Goethals, 
Capps,  and  Harris  dallied,  private  enterprise  pushed   forward 
with  speed.    Some  builders  regarded  the  good  business  as  assured 
for  five  years  even  if  the  war  ended  in  1918.     Such  was  the 
conclusion  of  experts  who  prepared  a  report  for  the  American 
International  Corporation  before  its  purchase  of  the  New  York 
Shipbuilding   Co.^      In    November,   1917,   the   Bethlehem    Steel 
Corporation,  which  had  gone  largely  into  the  shipbuilding  busi- 
ness through  the  purchase  of  the  Fore  River  shipyard  at  Oumcy, 
Mass.,  the  Harlan  &  Hollingsworth  yard  at  Wilmington,  Del., 
the  Maryland  Shipbuilding  &  Dry  Dock  Co.'s  plant  at  Baltimore, 
and  a  plant  at  San  Francisco,  arranged  to  consolidate  its  ship- 
yards under  one  management  so  that  they  might  eliminate  all 
duplicate  engineering  and  overhead  work,  and  adopt  standardiza- 
tion of  design  and  centralization  of  labor  so   far  as  possible, 
thus  permitting  the  greater  proportion  of  its  energy  to  go  into 
the  actual  building  of  ships.^     Many  shipyards  were  enlarging 
their  plants  as  much  as  possible.     The  Glasgow  Herald  reported 
(December  29,  1917)  that  in  38  months  up  to  the  end  of  1917, 
$359  000  0©0   worth   of   new   capital   had  been   authorized    for 
American    shipvards.      In  May,    1918,    Norwegian    capitalists 
announced  that  thev  had  purchased  ground  in  New  Jersey  for 
the  construction  of  "  one  of  the  largest  shipyards  m  the  world 
to  build  vessels  flying  the  Norwegian  flag  and  to  be  used  in  the 

American  trade."     One  of  the  finest  yards  in  the  country,  that 

'  Marine   Reviczv,   January,    1917. 
^  Fairplay,  November  22,  1917. 


296  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

of  the  New  York  Shipbuilding  Co.,  at  Camden,  enlarged  its 
capacity  50  per  cent.  The  chairman  of  the  United  States  Steel 
Corporation  announced  to  stockholders  at  their  annual  meeting, 
April  15,  1918,  that  the  company,  with  two  yards  of  ten  ways 
each,  one  at  Newark,  and  one  at  Mobile,  was  preparing  to  turn 
out  one  ship  every  ten  days  when  in  full  operation.  The  first 
launching  was  expected  in  May. 

The  English  shipbuilding  world  hailed  our  success  in  phrase- 
ology not  common  in  British  discussions  of  American  shipbuild- 
ing: 

I  now  hear  that  the  Skinner  and  Eddy  Corporation  of 
Seattle,  Wash.,  has  made  a  world's  record,  and  although 
only  commencing  operations  about  eighteen  months  ago, 
has  launched  a  steamer  of  8,800  tons  dead-weight,  dimen- 
sions 423  ft.  9  in.  by  54  ft.  by  29  ft.  9  in.  and  to  steam 
11^  knots,  in  G4  working  days  after  the  laying  of  the  keel, 
and  she  is  for  British  owners.  Of  course  work  was  carried 
out  night  and  day,  but  an  ordinary  individual  would  imagine 
that  what  can  be  done  in  the  United  States  and  Japan  can 
be  done  as  well  in  this  country,  if  the  men  and  machinery 
were  available.^ 

Our  government  encouraged  output  by  some  relaxation  of  the 
standards  prescribed  by  law,  but  it  is  interesting  to  note  that 
the  standards  for  lifeboats  were  made  more  stringent.^ 

Epoch  III.     The  Administrators,  the  Men  Who  Do 

Promptly  upon  the  resignation  of  Admiral  Harris,  Mr.  Piez, 
vice  president,  was  appointed  general  manager,^  continuing  to 
hold  the  office  of  vice  president.  His  record  was  a  good  one  in 
his  line,  that  of  scientific  production  engineer.  He  had  been  chief 
engineer  and  later  president  and  general  manager  of  the  Link 

'  Editorial,  Fairplav,  Deceml)er  13,  1917,  p.  993 

^  Omcial  Bulletin.  May  28,  1917. 

'  Mr.  J.  W.  Powell,  vice  president  of  Bethlehem  Steel  Shipbuilding  Cor- 
poration, testified  before  the  Senate  Committee  on  Commerce,  February  1, 
that  It  was  only  after  Piez  became  general  manager  that  experienced  ship- 
huildcrs   had   had   adequate  opportunity   to   lay   their   experience   before   the 


SHIPBUILDIXG    IN    THE    UNITED    STATES,    1914    TO    191S       297 

Belt  Co.,  builders  of  labor-saving  machinery  for  loading  and 
unloading  of  vessels,  storing  and  handling  coal  and  other  ma- 
terials, and  of  freight  in  bulk  or  package.  The  plants  of  the  Link 
Belt  Co.  had  been  Meccas  for  engineers  seeking  examples  of 
good  practice  in  scientific  management,  although  they  were  all 
located  well  inland  and  had  nothing  to  do  with  ships.  Through 
the  winter  Mr.  Piez  was  assisted  by  Rear  Admiral  Francis  T. 
Bowles  (assistant  to  the  general  manager),  a  man  whose  record 
was  similar  to  that  of  Mr.  Ferguson.  He  was  for  a  time 
chief  constructor  of  the  navy,  followed  by  eleven  years  at  the 
head  of  the  Fore  River  Shipbuilding  Co..  Quincy,  Mass.  Early 
in  the  spring  of  1918  he  came  to  Philadelphia  from  Washington 
to  take  charge  of  steel  construction  in  the  Philadelphia  district. 
He  did  not  prove  to  be  a  genius  at  getting  along  with  people, 
and  his  work  was  divided. 

On  April  16,  Mr.  Charles  M.  Schwab,  head  of  the  Bethlehem 
Iron,  Steel,  Ordnance,  and  Shipbuilding  enterprises,  accepted 
the  post  of  director  general  of  steel  construction,  for  the  Emer- 
gency Fleet  Corporation.  It  is  interesting  to  note  that  there  is 
no  suspicion  of  or  mention  of  politics  in  this  appointment.^  Mr. 
Schwab  is  a  .man  of  great  manufacturing  experience  and  a 
Republican.  He  is  a  man  of  undoubted  ability.  It  is  understood 
that  Mr.  Schwab  only  accepted  the  position  after  being  assured 
by  the  War  Industries  Board  that  he  should  have  priority  in  the 
delivery  of  steel  to  shipbuilding  plants.  It  is  said  that  the  Ship- 
ping Board  has  suffered  much  in  this  respect  because  all  through 
the  winter  the  wants  of  the  navy,  army,  and  railroads  had 
seemed  to  interfere.  Certain  it  is  that  there  has  been  much 
complaint  about  shortage  of  materials. 

One  of  the  first  acts  of  Mr.  Schwab  was  to  move  the  whole 
office  of  the  Emergency  Fleet  Corporation  from  crowded  Wash- 
ington to  Broad  Street,  Philadelphia,  where  it  would  be  in  the 

^  "  In  that  connection  I  said  to  the  President  of  the  United  States  :  '  We're 
going  to  get  you  into  a  lot  of  trouble  and  probably  I'm  going  to  make  a  lot 
of  mistakes,  but,  damn  it,  I'm  going  to  get  you  ships.'  " — Charles  M.  Schwab 
telling  the  League  to  Enforce  Peace  of  his  appointment  and  his  hopes,  May 
15,  1918.     (Philadelphia  Public  Ledger.) 


298  IXFLUEXCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

center  of  the  government's  shipbuilding  enterprises.  As  Mr. 
Schwab's  immediate  assistant  he  appointed  Mr.  Wm.  G.  Cox, 
to  be  director  of  shipbuilding  for  the  Philadelphia  district.  Mr. 
Cox  is  a  real  shipbuilder,  having  been  president  of  the  Harlan 
Hollingsworth  Corporation  at  Wilmington,  Del.,  when  this  en- 
terprise was  bought  out  by  the  Bethlehem  interests  in  1917.  Be- 
fore this  Mr.  Cox  had  been  at  Cramp's  shipyard,  Philadelphia. 
He  had  worked  on  the  Clyde,  and  in  Germany  where  he  had 
also  graduated  from  the  German  Royal  Technical  Institute  at 
Berlin. 

On  May  9  there  was  created  a  new  vice-presidency  in  the 
Emergency  Fleet  Corporation,  by  which  Howard  Coonley  of 
Boston,  a  manufacturer  and  banker,  took  charge  of  legal  fi- 
nancial, auditing,  contract,  statistical,  executive  and  admin- 
istrative divisions,  leaving  Mr.  Piez  free  to  devote  himself  ex- 
clusively to  shipbuilding. 

Wooden  ship  construction  is  under  the  management  of  James 
L.  Heyworth,  twenty-two  years  in  the  engineering  and  con- 
tracting business,  during  which  time  he  built  the  harbors  of  Port 
Arthur,  Texas,  and  Fernandino,  Florida. 


Shortage  of  Materials,  1918 

The  actual  achievements  of  the  Shipping  Board  under  the 
third  epoch  have  thus  far  been  far  from  satisfactory  to  anyone, 
due  in  part  to  difficulties  arising  from  the  severity  of  the  winter, 
and  to  material  and  labor  shortages.  December  1  the  first 
wooden  ship  under  the  war  rush  plan  was  launched  on  the  Pacific 
Coast.  It  was  a  boat  of  4,000  tons  dead-weight,  290  feet  long, 
built  in  the  record  time  of  120  days.  Some  spectacular  starts 
were  made  in  December,  to  be  followed  by  falling  hopes.  On 
December  20,  the  very  day  that  Admiral  Harris  resigned,  the  first 
rivets  were  driven  in  the  first  of  the  standard  fabricated  steel 
ships  at  Newark.  In  February  initial  keels  were  laid  at  the  sister 
plant  at  Hog  Island,  but  a  month  later  nothing  had  been  done, 
and  the  Hog  Island  keels  were  still  only  keels  in  April  because 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       299 

of  shortage  of  material  and  the  incompleteness  of  the  yard  for 
the  prosecution  of  the  work.  The  actual  amounts  of  material 
involved  are  stupendous.  Mr.  E.  H.  Rigg,  architect  of  the  New 
York  Shipbuilding  Co.,  gave  the  following  figures  for  material 
to  be  used  in  the  Hog  Island  contract : 

We  are  building  fifty  small  ships  of  7,500  tons  dead- 
weight and  seventy  of  8,000  tons  dead-weight,  making  a 
total  of  120.  Many  of  you  have  no  idea  of  the  v/eight 
which  is  put  into  the  actual  building  of  these  ships. 

The  quantity  of  material  involved  in  the  building  of  these 
120  ships  follows : 

Pounds  Long  Tons 

Steel    828.700,000  370,000 

Woodwork    48,150,000  21,500 

Equipment   161,300,000  72,000 

Machinery     149,000,000  66,500 

Totals   1,187,150,000  530,000 

Total  horsepower,  510,000;  total  dead-weight,  035,000 
long  tons;  total  oil  fuel,  167,000  long  tons;  total  gross  ton- 
nage, 767,000  tons;  total  launching  weights,  460,000 
long  tons;  total  length  of  ships.  51,410  feet,  or  nine  and 
three-quarters  miles;  total  cargo  carried,  750,000  long  tons.^ 

There  were  repeated  calls  for  priority  for  the  shipyards. 
Illustrating  this  difficulty,  Homer  L.  Ferguson  said  in  the  Marine 
Review,  December,  1917 : 

It  seems  to  me  that  we  all  want  to  do  the  best  we  can, 
but  we  would  very  much  appreciate  it  if  we  could  go  to 
Washington  and  say  to  seme  one  that  this  is  the  m^ost  im- 
portant, and  that  is  the  next,  and  that  is  the  next.  Instead 
of  that,  we  appeal  from  one  department  to  another,  and 
frequently  end  up  with  nothing. 

The  exceedingly  cold  and  snowy  winter  with  its  accompany- 
ing unprecedented  railroad  blockades,  helped  to  limit  the  pro- 
duction of  iron  and  steel  and  stop  the  delivery  of  materials  at 
the  shipyards.     For  example,  it  was  reported  in  January,-  that 

^  Philadelphia  Public   Ledger,   December  20,    1917. 
^  Weekly  Journal  of  Shipping,  January  22,  1918. 


300  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

1,000  cars  of  piling  for  Hog  Island  were  tied  up  in  Baltimore, 
and  for  the  time  at  least  could  not  be  moved  despite  their  urgent 
need  in  the  Hog  Island  mud. 

It  is  easy  to  see  why  Mr.  Schwab  insisted  on  priority  of  steel 
for  the  shipyards,  and  also  why  he  is  reported  as  planning  to 
establish  at  the  Hog  Island  plant  a  three  months  reserve  of  ma- 
terials, and  to  attempt  to  maintain  it,  so  that  in  case  of  emer- 
gency the  building  can  go  steadily  forward  from  this  stock. 

The  situation  was  similar  with  regard  to  material  for  wooden 
ships.  General  Goethals  had  contracted  June,  1917,  with  the 
Southern  Pine  Association  for  140  million  feet  of  yellow  pine 
for  100  wooden  ships.  Unfortunately,  however,  after  ships  were 
under  way  it  was  concluded  that  some  of  the  timbers  were  not 
large  enough,  and  could  only  be  secured  from  the  Pacific  Coast. 
The  resulting  delay  was  thus  bitterly  described  by  the  Phila- 
delphia Public  Ledger  editorial,  November  3,  1917  : 

Wooden  Ships  Without  Keels.  Shipyards  full  of  deck- 
plank,  upper  timbers  and  finishing  materials,  and  with  large 
timbers  for  keels  officially  forgotten — that  is  the  situation 
revealed  nine  months  after  the  intensification  of  U-boat 
warfare,  eight  months  after  the  American  declaration  of 
a  state  of  war,  four  months  after  the  retirement  of  Denman 
and  Goethals,  and  the  placing  of  Hurley  and  Capps  in  charge 
of  the  Emergency  Fleet  Corporation. 

On  April  15  it  was  reported  that  special  trains  carrying  15,- 
000,000  feet  of  fir  timber  had  left  the  Pacific  Coast  for  Atlantic 
and  Gulf  shipyards  which  had  been  delayed  in  turning  out  their 
wooden  ships. ^  This  was  done  by  special  arrangement  between 
the  Shipping  Board  and  the  Director  General  of  Railroads,  who 
expected  to  get  the  lumber  trains  through  in  one-fifth  the  usual 
time.  In  another  month  it  was  expected  that  owing  to  another 
change  in  lumber  specifications  the  Atlantic  shipyards  would 
depend  upon  the  Southern  Pine  Association,  and  would  need  to 
import  no  more  timbers  from  across  the  continent. 

'  See  Chapter  VIII.  See  also  Ferris  design  mentioned  above  in  this 
chapter. 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       301 

The  scarcity  of  materials  shows  the  wisdom  of  our  firm  poHcy 
in  the  negotiations  with  Japan  about  the  exports  of  steel.  For 
many  months  we  refused  to  let  it  go,  except  in  return  for  ships 
which  Japan  refused  to  grant.'  After  months  of  negotiation  we 
came  to  an  agreement  in  the  last  week  of  March,  1918,  which 
was  of  mutual  benefit.  We  let  Japan  have  steel,  of  which  one  ton 
makes  about  three  tons  dead-weight  of  shipping,  and  Japan  agreed 
to  sell  or  charter  two  tons  dead-weight  of  shipping  for  every 
ton  of  steel.  Thus  we  got  ships — 1.5  of  130,000  tons,  bought, 
to  be  delivered  May  to  December,  1918;  24  steamships  of  150,- 
000  tons  dead-weight,  chartered,  for  six  months,  delivery  to  begin 
April,  1918 ;  27  steamships  of  234,000  tons  to  be  delivered  in 
the  first  half  of  1919. 


Labor  Supply  and  Housing 

The  labor  supply  is  naturally  a  puzzle  in  a  country  sending 
men  to  the  camps  by  millions,  and  called  upon  to  double,  triple, 
and  quadruple  the  number  of  workers  in  the  shipyard  and  other 
war  industries.  The  process  of  standardization  of  ships  simpli- 
fied the  shipyard  labor  problem  by  making  it  easier  to  teach  the 
men  the  simpler  tasks.  Manifestly  a  great  many  men  had  to  be 
trained  for  the  work,  and  the  Shipping  Board  has  gone  about 
it  in  a  very  systematic  way.  At  Newport  News  they  set  up  a 
far-reaching  system  of  industrial  education  which  may  almost 
be  called  a  shipbuilders'  normal  school.  It  was  an  instruction 
training  center  to  which  from  75  to  150  skilled  mechanics  were 
sent  from  various  yards  for  a  six  weeks  course  to  learn  how  to 
teach  a  knowledge  of  their  trades  to  recruits  in  their  own  yards. 
It  was  figured  that  in  six  months  the  graduates  of  this  training 
school  would  be  in  a  position  to  initiate  75,000  new  workers 
from  kindred  trades  into  shipbuilding.  New  York  State  and 
various  city  school  systems  also  opened  shops  and  schools  for 
training  of  shipyard  workers.  The  British  shipbuilders  pointed 
out  with  great  satisfaction  ^  the  great  advantage  America  had 

'  Fairplay,  May  13,  1917. 


302  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

in  this  emergency  because  her  shipbuilding  labor  was  not  organ- 
ized, and  therefore  had  not  adopted  restrictive  rules  and  was 
willing  to  use  machinery  so  far  as  possible. 

One  of  the  serious  handicaps  in  the  labor  situation  has  been 
the  absence  of  housing  facilities.  The  Shipping  Board  has  acted 
on  the  assumption  that  they  were  doing  a  plenty  by  putting  up 
money  to  build  shipyards,  and  to  build  ships.  The  shipbuilding 
companies  have  hesitated  to  build  houses  fearing  that  they 
would  be  idle  on  their  hands  when  the  war  is  over.  Private 
capital  has  been  similarly  fearful,  and  yards  have  accordingly 
been  idle  when  they  might  have  worked,  and  workers  have  in- 
curred expense,  discomfort,  danger,  and  loss  of  time  in  mak- 
ing long,  tedious,  extremely  crowded  and  exposing  journeys  to 
remote  locations  almost  inaccessible  to  the  commuter,  but  with  no 
place  of  residence  near  by. 

At  Newport  News  the  Shipping  Board  threatened  to  requisi- 
tion houses  to  prevent  rent  profiteering.^  For  the  Hog  Island 
plant  extensive  barracks  were  built  on  the  premises,  but  by  no 
means  enough  to  house  all  the  workers.  It  was  proposed  to 
commandeer  houses  in  Philadelphia,  but  they  were  all  occupied 
and  the  opposition  was  too  great.  Finally,  on  May  25,  1918, 
the  Emergency  Fleet  Corporation  began  to  build  some  houses  of 
itc  own,  450  in  number. 

Labor  has  been  very  uncertain  in  the  shipyards  because  of  the 
constantly  rising  pay  and  the  constant  practice  of  the  new  yards 
of  stealing  labor  from  the  old,  and  the  government  stealing  it 
from  both.  At  last  the  Shipping  Board  established  a  labor 
adjustment  board  which  attempted  to  regulate  and  prevent  these 
evils  as  far  as  possible,  for  undoubtedly  they  tended  not  only 
to  disorganization  of  the  actual  work,  but  to  the  great  destruc- 
tion of  esprit  dc  corps.  Through  the  spring  of  1918  there  have 
been  distinct  efforts  made  to  create  among  shipyard  workmen 
the  same  pride  that  prevails  in  a  good  regiment.  Bowles  and 
Schwab  and  others  have  made  many  addresses  to  the  men.  An 
in.spiring  speaker    Dr.  Charles  A.  Eaton,  of  New  York,  went 

'  Official  Bulletin,  May  4,  1918. 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       303 

about  from  yard  to  yard  addressing  meetings  for  many  weeks, 
during  which  lime  he  alone  addressed  150,000  workers  and  is 
still  at  it.  As  a  result  of  this  kind  of  work  a  plate  shop  in  the 
New  York  district  that  had  been  turning  out  SO  tons  a  day 
promptly  began  to  turn  out  135  tons.  At  another  plant  a  gang 
of  riveters  who  had  been  averaging  300  to  400  per  day  turned 
out  over  1,000.  Persons  familiar  with  Delaware  River  yards 
tell  me  (May  15,  1918)  that  there  is  a  distinct  change  in  the 
attitude  of  the  workmen  since  the  coming  of  Mr.  Schwab. 

The  Rivalry  for  Achievement  and  the  Rising  Output 

There  is  rivalry  between  yards  for  good  records — a  most 
wholesome  thing.  April  21  at  11 :  57  p.m.  the  Grant  Smith 
Porter  Co.  of  Portland,  Oregon,  launched  a  wooden  steamer, 
Waken,  on  the  Willamette  River,  51  days  after  the  laying  of 
the  keel,  which  was  agreed  to  be  world's  record  time.  The 
Eastern  yards  did  not  care  to  be  exceeded  by  the  Western,  and 
they  deliberately  announced  that  they  were  after  the  record, 
which  had  for  some  time  been  held  in  the  West.  On  Sunday 
morning,  May  5,  1918,  they  got  it  through  the  phenomenal 
achievement  of  the  New  York  Shipbuilding  Co.  of  Camden,  in 
launching  the  5,500  ton  steel  collier  Tuckahoe  in  the  unrivaled 
time  of  27  days,  2  hours,  50  minutes,  from  the  laying  of  the 
keel.     She  was 

launched  virtually  complete  in  every  detail,  boilers  in  place, 
engines  installed,  masts  stepped,  funnel  in  place,  propeller 
fitted,  rudder  hung  and  only  minor  finishing  touches  yet  to 
be  pirt  on  before  the  vessel  is  commissioned. 

No  shipyard  in  the  world  has  achieved  anything  approach- 
ing the  record  of  the  Camden  plant.  The  best  previous 
American  retord  was  fifty-five  days,  and  the  shipbuilders 
of  Great  Britain  have  not  been  able  to  do,  it  is  said,  better 
than  about  two  and  a  half  months.^ 

^  The  detailed  record  of  the  Tuckahoe  follows:  "April  8,  keel  laid;  April 
12,  double  bottom  completed ;  April  14,  frames  and  bulkheads  erected  and 
portion  of  shell  plating  finished;  April  15,  stern  frame  in  place;  April  22, 


304         INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

In  a  very  few  more  days  the  Tiickahoe  was  en  route  on  the  high 
seas  with  a  cargo. 

Wholesome  also  in  its  results  is  the  rivalry  of  gangs  of 
riveters,  because  it  brings  the  effort  right  down  to  the  in- 
dividual worker,  and  has  already  become  international.  The 
Philadelphia  Public  Ledger,  May  9,  1918,  reported  that  riveter 
Shock's  record  of  2,720  rivets  in  nine  hours  at  the  Baltimore 
Dry  Docks  &  Shipbuilding  Co.,  April,  1918,  which  was  under- 
stood to  be  unbeatable  by  his  associates,  held  the  record  for 
only  a  few  days,  when  it  was  beaten  by  Edward  Gibson  and 
crew  of  the  Federal  Shipbuilding  Co.  at  Camden,  N.  J.,  who 
drove  2,918  rivets  in  8  hours.  But  the  American  record  soon 
went  to  John  Carrigan  of  Detroit,  with  3,415,  while  on  May 

8  the  Atlantic  cables  from  London  reported  that  one  Robert 
Farrand  and  gang  in  the  yards  of  Frazer  &  Frazer,  hammered 
in  4,2GT  rivets,  or  one  to  every  7/4  seconds.  On  May  15  the 
record  of  4,422  rivets  in  9  hours  was  in  Scotland.  On  the  16th 
it  was  back  in  Baltimore  at  the  astonishing  figure  of  4,875  in 

9  hours  by  Charles  Knight,  colored,  who  had  kept  seven  helpers 
busy.  One  week  later  Oakland,  California,  claimed  the  record 
with  5,020  rivets  for  a  gang.  On  the  29th  of  May,  John  Lowry 
of  England  claimed  7,841  rivets.  Long  may  their  good  speed 
continue.^  It  indicates  that  the  builders  on  both  sides  of  the 
Atlantic  are  getting  down  to  their  gait,  and  we  may  expect  that 
by  the  end  of  the  summer  American  shipbuilding  will  be  at  nearly 
full  swing,  with  output  at  a  speed  never  before  equaled,"  although 

boilers  put  on  board;  April  29,  stern  post  boarded  and  stern  tube  put  in 
plate;  April  30,  masts  stepped  and  engine  installation  begun;  May  2,  funnel 
put  in  place;  May  4,  machinery  all  in  place  and  engines  completely  installed. 
From  the  twenty-sixth  day  to  launching,  the  time  was  occupied  in  putting 
on  finishing  touches."     {  Philadelphia  Public  Ledger,  May  4,  l918.) 

'  Some  say  these  contests  do  not  have  a  beneficial  effect.  The  knowledge 
of  them  and  the  records  must  inriuencc  men  who  have. been  in  the  habit  of 
doing  but  from  200  to  400  per  day,  but  the  contests 'are  of  course  a  bit 
theatrical  and  under  very  favorable  circumstances,  and  other  workmen  stop 
to  watch  the  show. 

'  As  proof  is  being  read  the  following  verification  comes  to  hand: 
In  the  12  months  ended  just  now  (10  a.  m.,  September  26)  American  ship- 
yards have  built,  and  the  Commerce  Department,  Bureau  of  Navigation,  has 
officially  numbered  1,956,455  gross  tons,  passing  the  previous  high  record  of 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       305 

the  Hog  Island  plant  is  not  expected  to  reach  its  maximum 
until  the  middle  of  1919.  As  evidences  of  speed  we  launched 
80,000  tons  of  steel  shipping  in  a  week  ^  and  seventeen  wooden 
vessels  in  the  first  seventeen  days  of  May."  The  unfortunate 
thing  is  that  we  are  at  least  one  year  behind  what  might  reason- 
ably have  been  attained  by  an  aggressive  and  efficient  adminis- 
tration and  at  least  two  years  behind  '  what  should  have  been 
produced  by  a  people  "  able  to  look  things  in  the  face  before  they 
hit  us  in  the  face."  * 

It  is  greatly  to  be  regretted  that  the  people  of  this  country 
have  been  deceived  by  a  great  many  uninformed  or  merely  bom- 
bastic statements  concerning  shipbuilding  from  persons  they 
had  a  right  to  believe. 

The  Board's  Policy 

When  the  existing  private  plants  got  going  full  speed,  the 
question  of  enlargements  arose  about  the  time  of  the  coming 
of  Piez,  late  in  December,  1917.  Mr.  Henry  Ford,  who  had  been 
consulted  as  an  expert,  recommended  two  things  :  a  reduction  in 
the  number  of  the  types  of  shipbuilding  to  one,  and  the  erection 
of  several  yards  in  the  South  similar  to  the  Hog  Island  and 
Newark  yards  to  build  ships  as  nearly  as  possible  after  the  way 
he  had  built  automobiles   with   such   astonishing   speed.      It   is 

the  United  Kingdom  for  1913  calendar  year,  1,932,153  gross  tons  launched,  of 
which  1,793,287  gross  tons  completed  (Lloyd's  returns). 

The  United  States  for  12  months  to  date  completed  1,956,455  gross  tons, 
and  the  United  Kingdom  for  11  months  ended  August  31  completed  tonnage 
1,512,640  gross  tons.  Together  3,469,095  gross  tons  completed  exceeds  the 
world's  record,  3,332,882  gross  tons,  launched  by  all  nations  in  the  calendar 
year  1913. 

'  Official   Bulletin,    May    14,    p.    2. 

"  Frederick  T.  Holbrook,  in  charge  of  construction  at  Hog  Island,  an- 
nounced May  14,  1918,  that  next  year  Americans  will  marvel  at  the  result. 
Sixteen  keels  were  then  laid.  Three  days  later  a  gang  of  workers  made 
a  record  of  161  tons  in  setting  steel.-  The  previous  record  had  been  108  tons. 
The  Hog  Island  yard  is  out  to  beat  the  record  of  the  yard  across  the  river 
that  built  the  Ttickahoe.  They  are  also  after  the  $53,000  cow,  Sophie  III, 
offered  by  Mr.  Schwab  for  the  best  "  speeding  up  "  shipj-ard  record. 

^  The  fabricated  ship  was  launched  May  30,  1918,  from  the  Newark  yard 
of  the  Submarine  Boat  Co. 

*  Quoted  from  A.  Lawrence  Lowell,  addressing  the  League  to  Enforce 
Peace,  May  15,  1918. 


306  IXFLUEXCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

not  surprising  that  the  Board,  then  overwhelmed  with  unfinished 
tasks  and  railway  congestion,  should  have  announced  the  policy 
as  it  did,  January  21,  1918,  of  encouraging  no  more  new  yards, 
but  rather  to  enlarge  the  old — thus  taking  advantage  of  existing 
organization. 

As  a  part  of  this  policy  to  which  jNIr.  Schwab  adheres  with  his 
announced  ambitions  of  three  completed  ships  per  day  in  the  sum- 
mer of  lUl'J  ^  the  New  York  Shipbuilding  Co.'s  plant  announced 
in  mid  May  the  early  enlargement  of  its  very  excellent  plant  by 
beginning  on  seven  new  ways  at  an  expense  of  seven  to  eight 
million  dollars.  These  are  for  high  class  ships — transports,  re- 
frigerator ships,  etc. 

The  success  of  the  concrete  ship  gives  added  force  to  Mr. 
Ford's  suggestion  of  more  yards  and  in  the  South,  and  such 
yards  are  in  prospect.     (See  Chapter  VIII.) 

The  United  States  Government  has  a  Shipping  Board,  is 
spending  money  by  billions,  and  when  the  war  is  over  it  will 
have  a  big  fleet  and  some  shipyards ;  but  we  should  note  that 
from  the  standpoint  of  industrial  management  it  has  undertaken 
no  new  function.  For  many  years  it  has  drawn  up  specifications, 
let  contracts  and  supervised  their  execution  at  the  hands  of 
private  builders.  That  is  what  we  are  doing  now.  The  Ship- 
ping Board  created  the  Emergency  Fleet  Corporation,  which 
is  a  contract-letting  and  work-stimulating  body.  It  lets  con- 
tracts. Thus  it  contracts  with  the  American  International  Cor- 
poration, which  agrees  to  build  ships  on  contract.  But  first  this 
corporation  lets  contracts  to  its  creature,  the  American  Inter- 
national Shipbuilding  Corporation,  which  builds  a  shipyard  by 
subletting  to  Stone  and  Webster,  and  many  other  experienced 
contractors.  The  American  International  Corporation  gets  its 
shipbuilding  knowledge  by  buying  out  the  New  York  Shipbuild- 
ing Co.,  Camden,  N.  J.,  one  of  the  best  enterprises  of  its  kind 
in  the  United  States.    On  its  executive  side  the  role  of  the  o-overn- 

o 

ment  has  not  been  changed.     It  is  merely  a  contract  letter  and 
a  subsidizer.  and  even  in  this  it  is  going. on  patriotism  rather 

'  Philadelphia  Public  Ledger,  May  17,  1918. 


SHIPBUILDING    IN    THE    UNITED    STATES,    1914    TO    1918       307 

than  on  a  mere  business  basis.  Everyone  knows  that  Alessrs. 
Hurley,  Piez,  Schwab,  and  scores  of  others  in  the  large  and 
rapidl}-  growing  staff  of  the  Shipping  Board  could  make  more 
money  at  something  else,  but  not  more  service. 

It  is  scarcely  reasonable  to  hope  that  business  can  continue 
indefinitely  on  that  basis.  In  the  background  of  the  field  of 
governmental  enterprise  stands  the  haunting  ghost  of  unsatis- 
factory pay.  The  American  legislatures,  high  and  low,  are  prone 
to  think  of  governmental  pay  in  terms  of  average  men.  The 
result  is  that  the  needed  specialist  can  get  more  pay  elsewhere. 
Almost  equally  bad  is  the  fact  that  the  civil  service  is  a  place 
where  the  man  who  has  failed  can  often  get  more  than  he  is 
worth  outside.  As  an  advantage  on  the  other  side  is  standardi- 
zation, an  industrial  principle  of  very  wide  application  which  aids 
governmental  operation  of  industry,  especially  production,  be- 
cause of  the  uniformity  of  its  conditions. 


CHAPTER  XI 
Shipping  Policy  after  the  Great  War 

Shipping  Situation  at  End  of  War 

The  war  promises  to  end  with  the  governments  of  the  leading 
maritime  nations,  the  United  States  and  the  United  Kingdom 
especially,  in  possession  of  large  fleets  of  vessels  and  in  control  of 
governmental  and  private  shipyards.  There  will  probably  (almost 
certainly)  follow  a  period  of  continued  governmental  shipbuilding 
and  ship  control  during  the  continuance  of  ship  scarcity  and  the 
great  boom  of  reconstruction.  Then  wall  come  overproduction  of 
shipping,  unemployment  and  low  freight  rates,  very  low  freight 
rates.  In  that  day  when  anyone  can  get  all  the  ships  he  wants  at 
less  than  cost  we  will  be  in  that  position  of  economic  balance  in 
which  we  can  sit  down  calmly  and  consider  permanent  policy.  The 
war  will  then  be  over — so  far  as  ship  w'ork  is  concerned.  What 
will  we  want  with  regard  to  shipping?  The  answer  is  simple.  The 
trading  peoples  of  the  earth  want  cheap  ships,  and  plenty  of  them, 
always  at  their  disposal  for  a  reasonable  hire.  The  getting  of 
what  they  want  is  not  so  simple  as  the  stating  of  it.  In  a  war- 
free  world  this  abundance  of  cheap  ships  is  exactly  what  w^e 
would  have  and  also  it  is  surprisingly  close  to  w^hat  we  did  have 
for  a  quarter  of  a  century  prior  to  1914. 

The  Ideal  Arrangement 

This  ideal  arrangement  of  shipping  would  mean  that  the  nation 
or  nations  with  the  most  abundant  capital,  and  therefore  the 
nations  willing  to  lend  most  cheaply,  would  build  or  pay  for  ships; 
that  they  would  be  manned  by  the  men  of  those  nations  who  are 
w  illing  to  work  for  the  least,  and  that  this  cheap  capital  and  these 
cHeap  workers  would  enrich  us  by  their  inexpensive  services. 
They  would  go  anywhere.      In   fact  these  ships  would  be  as 

308 


SHIPPING    POLICY    AFTER    THE    GREAT    WAR  309 

mobile  in  the  realms  of  possible  navigation,  as  other  capital  has 
been  throughout  the  realms  of  possible  investment.  Thc}^  would 
merely  give  us  one  more  example  of  the  internationalization  of 
capital  that  has  been  so  common;  but  with  this  one  great  dif- 
ference :  the  ship  can  be  withdrawn.  She  can  sail  away  and 
never  come  back,  whereas  the  railroad,  the  factory,  the  mine  and 
the  plantation  are  fixed  property.  They  stand ;  they  can  be  requi- 
sitioned, commandeered,  or  confiscated  by  the  nation  in  whose 
bounds  they  lie.  Because  of  this  mobility  of  ships,  nations  not 
equipped  with  capital,  materials,  and  labor,  to  be  natural  ship- 
owners, have  used  the  economically  artificial  means  described  in 
Chapter  V  to  guarantee  themselves  at  least  a  minimum  of  ship- 
ping, which  could  become  national  property  in  time  of  war  or 
other  emergency.  The  results  of  these  varied  subsidy  policies 
have  in  no  case,  save  the  possible  exceptions  of  Japan  and  Ger- 
many, sufficed  to  meet  the  complete  commercial  needs  of  any 
important  nation.  Meanwhile,  the  countries  which  may  for  the 
time  being  be  considered  the  natural  shipowning  countries,  Great 
Britain,  Norway  and  Holland,  have  built  or  bought  millions  of 
tons  of  surplus  shipping  and  placed  it  at  the  disposal  of  the 
world  to  meet  its  shipping  needs,  just  as  money  to  build  railroads 
and  wharves  has  been  placed  at  the  financial  and  industrial  dis- 
posal of  the  same  peoples. 

In  a  neutralized  world,  with  war  definitely  and  finally  banished, 
we  would  promptly  return  to  this  policy.  If  safe  English  ships, 
manned  by  Chinese  sailors,  are  indefinitely  willing  to  carry 
Americans  and  others  who  wish  to  ride,  and  are  indefinitely 
willing  to  do  this  service  at  a  less  price  than  American  companies, 
there  is  no  argument  that  can  be  advanced  why  we  should  not 
permit  them  to  have  the  privilege  and  permit  ourselves  to  have 
the  advantage,  and  such  will  be  the  conditions  in  a  thoroughly 
neutralized  world  if  we  ever  get  it.  Meanwdiile,  we  are  working 
through  a  struggle  in  which,  while  a  league  of  nations  is  the 
great  hope,  the  idea  of  nationalism,  national  need  and  national 
force,  is  perhaps  being  enhanced.  Certainly  the  national  factor 
in  economic  and  maritime  policy  has  assumed  size  before  un- 


310         IXFLUEXCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

dreamed,  with  national  shipyards,  national  fleets,  and  absolute 
national  control  of  both  yards  and  fleets. 

The  Impossibility  of  General  National  Independence  in 

Shipping. 

When  the  imperative  need  for  the  national  policy  has  passed 
should  we  have  hope  for  national  independence  with  regard  to 
ships,  and  if  so,  what  does  it  involve?  The  answer  is  rather 
surprising — double  or  more  than  double  cost  of  freight,  duplica- 
tion of  fleets,  idleness  of  ships,  and  over  half  the  world's  vessels 
running  empty  all  the  time. 

I  once  saw  two  perfectly  staked  and  ridered  rail  fences  parallel 
to  each  other  at  such  a  distance  apart  that  each  came  up  exactly 
to  the  edge  of  adjoining  pieces  of  land.  It  was  called  a  "  mad 
lane  "  because  neighbors,  having  quarreled  over  their  fences,  built 
each  his  own  perfect  fence  beside  his  neighbor's  with  barely 
room  to  walk  betw-een.  Similar  mad  lanes  of  the  sea  are  in- 
volved in  complete  maritime  independence.  It  would  mean  that 
all  American  exports  to  Britain  went  in  American  ships,  which 
could  get  no  British  cargo  coming  back,  for  that  must  be  carried 
westward  across  the  Atlantic  in  British  ships,  which  in  turn 
could  get  no  American  cargo  coming  back.  Thus  w^e  have  guar- 
anteed one-half  the  world's  ships  always  empty.  Add  to  this  the 
fact  that  there  is  already  a  very  considerable  movement  of  empty 
ships  because  trades  are  unbalanced  and  we  see  that  six-tenths, 
probably  05  per  cent  of  the  world's  shipping  would  be  running 
empty  under  this  condition  of  nationalistic  independence.  Per- 
haps that  sounds  fantastic,  but  nationalism  has  already  made 
many  a  ship  run  empty.  It  has  already  established  mad  lanes 
of  the  sea.  To  find  a  perfect  example  one  need  go  no  further 
from  home  than  our  own  coasts  where  our  coasting  trade  is 
normally  reserved  by  statute  to  American  vessels,  while  foreign 
vessels  in  unending  procession,  empty  or  partly  empty,  skirt  our 
shores  from  Norfolk  where  they  coal,  to  Galveston  and  New 
Orleans  where  they  load  in  whole  or  in  part.  For  decades  the 
foreign  owners  would  have  been  delighted  to  load  them  at  Gal- 


SHIPPING    POLICY    AFTER    THE    GREAT    WAR  311 

veston  with  cotton  for  New  England,  and  at  Norfolk  with  coal 
Cr  iron  for  Texas.  It  was  only  under  the  pressure  of  ship  famine 
produced  by  war  that  late  in  lOlV  we  finally  permitted  this  simple 
economy  of  permitting  American  freights  to  be  taken  in  foreign 
ships  between  two  of  our  own  ports/  and  then  only  for  the  period 
of  the  war  and  120  days  thereafter,  and  with  a  special  permit 
for  each  voyage.  The  policy  of  carrying  goods  only  in  ships 
of  the  producing  nation  would  annihilate  the  cheaply  operated 
tramp  which  is  economical  because  her  owners  can  twist  her 
and  shift  her  through  all  the  trades  of  the  earth.  Under  this 
nationalism  she  could  not  twist  around  from  England  to  Argen- 
tina, from  Argentina  to  Galveston,  from  Galveston  to  Norway, 
from  Norway  to  Philadelphia,  and  from  Philadelphia  to 
Genoa,  from  Genoa  to  Odessa,  and  from  Odessa  back  to  Liver- 
pool. 

For  countries  of  simple  economic  life  and  heavy  seasonal  trade, 
the  idea  of  complete  maritime  independence  almost  passes  from 
the  ridiculous  to  the  fantastic.  Take  the  case  of  Argentina,  an 
enormous  exporter  of  wheat,  corn,  and  flaxseed,  all  of  which 
have  their  season  of  harvest  at  the  end  of  summer,  and  are  ready 
for  prompt  shipment  to  the  markets  of  the  North  Atlantic.  Shall 
Argentina  carry  these  products  in  her  own  ships?  If  so,  shall 
she  have  enough  ships  to  carry  them  when  they  ought  to  go,  and 
do  now  go,  in  a  few  months  after  harvest  or  shall  she  spread 
the  service  over  a  year  and  let  the  grain  lie  the  while?  The 
economics  of  ship  operation  indicates  the  latter  course,  but  owing 
to  fluctuation  of  harvest,  she  has  some  years  twice  the  export  of 
other  years.  What  should  she  do  the  year  she  has  50,000,000 
bushels  of  surplus  grain,  making  about  1,500,000  tons  of  freight? 
She  must  either  provide  ships  for  the  occasional  maximum  year, 
or  let  the  grain  lie  over  for  two  or  three  years,  subject  to  moth, 
rat,  weevil  and  rain,  until  her  national  fleets  can  finally  carry  it 
to  the  hungry  millions  beyond  the  equator.  Such  a  policy  would 
be  about  as  sensible  as  it  would  be  for  every  railroad  in  the 

'  The  transport  for  the  AlHed  cause  would  be  solved  if  it  could  now  have 
at  its  disposal  the  ?hip  ton  mileage  that  has  been  wasted  by  the  foreign 
shipping  that  has  steamed  in  compulsory  idleness  along  our  coasts. 


312         INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

United  States  to  try  to  supply  itself  with  sleeping  cars  despite 
the  fact  that  it  used  man}-  of  them  but  four  weeks  in  the  year. 

It  is  easy  to  imagine  that  national  exasperation  in  a  world 
with  such  shipping  management  might  induce  the  strong-handed 
to  enter  into  bargaining  enterprises  such  as  we  have  seen  so  forci- 
bly used  during  the  trade  restrictions  of  the  war.  Thus  the 
potash  famine  which  apparently  can  be  ended  only  by  shipments 
from  the  German  mines,  gives  Germany  a  strong  hand  in  certain 
bargains.  The  British  monopoly  of  West  European  coal  gives 
her  also  a  strong  hand  for  a  bargain,  but  it  is  somewhat  limited 
by  the  fact  that  there  is  also  German  coal.  The  United  States 
can  also  make  strong  presentation  in  trade  bargain  by  withhold- 
ing her  petroleum,  her  cotton,  or  her  phosphate.  But  any  such 
action  by  any  of  these  nations  would  be  a  most  unfortunate  sow- 
ing of  the  seeds  of  trouble,  for  if  the  war  has  shown  us  anything, 
it  has  shown  us  the  difficulty  of  establishing  restrictions  on  the 
ultimate  destination  of  goods.  Complete  national  maritime  inde- 
pendence for  even  five  leading  nations  is  plainly  an  idle  topic  of 
discussion.  Nevertheless,  we  have  that  enhanced  sense  of  the 
importance  of  maritime  sufficiency.  What  will  we  do  about  it 
after  the  war?  I  believe  we  can  safely  say  that  we  will  do  some- 
thing to  guarantee  this  nation  more  ships  than  she  had  in  the  pre- 
war period,  and  other  nations  will  feel  the  same  impulse. 

Factors  Controlling  Shipping  Policies 

The  actual  policies  that  the  nations  will  probably  adopt  depend 
upon  four  things:  (1)  their  prewar  past,  and  the  resulting  na- 
tional point  of  view;  (2)  the  influences  exerted  by  the  war;  (3) 
the  industrial  efficiency  of  the  government  control  and  operation 
of  industry;  (4)  the  conditions  of  the  first  few  years  of  peace 
during  which  the  new  maritime  policies  of  the  new  epoch  will  be 
in  process  of  formation. 

It  is  impossible  to  discuss  the  fourth  of  these  influences  now 
because  it  remains  in  the  unrevealed  future.     The  same  is  rela- 
^  tively  true  of  the  third,  but  the  first  and  second  are  capable  of  ^ 


SHIPPING    POLICY    AFTER    THE    GREAT    WAR  313 

some  examination,  and  by  explaining  the  past  and  present  mari- 
time policies  of  leading  nations,  we  have  the  best  obtainable 
chance  to  view  coming  events  with  understanding. 

The  Policy  of  Britain — "  Laisscz  Faire  " 

Britain  has  become  the  leading  maritime  nation  and  owner  of 
half  the  world's  shipping  by  pursuing  the  policy  of  laisscz  fairc — 
let  alone.  This,  however,  proves  nothing,  except  that  in  the  case 
of  Britain  in  times  past  the  policy  worked.  It  does  not  prove 
that  it  was  then  or  now  good  for  other  countries,  or  that  Britain 
will  stick  ro  it.  It  worked  in  Britain's  case  in  times  past  for  a 
number  of  good  reasons  which  combined  to  give  Britain  natural 
advantages  that  no  other  nation  could  equal.  An  island,  opposite 
the  populous  coasts  of  Europe  at  a  natural  end  of  trade  routes, 
she  had  a  prime  commercial  location.  She  had  coal,  iron,  and 
capital.  Her  emigrating  sons  gave  colonies  and  colonial  oppor- 
tunities for  investment  of  British  capital  in  all  quarters  of  the 
globe.  The  Napoleonic  wars  gave  her  for  two  decades  almost  a 
monopoly  of  the  sea  trade.  With  these  opportunities  England'" 
enterprise,  almost  unaided  by  the  government,  was  able  to  build 
up  the  nation's  leadership  in  shipping  and  develop  in  her  mari- 
time interests  that  sturdy  sense  of  independence  and  that  sturdy 
faith  in  individualism  which  finds  expression  in  the  following 
statement  of  the  president  of  the  Liverpool  Steamship  Owners 
Association  : 

The  British  shipowners  should  be  allowed  to  build  their 
ships  and  to  carry  on  and  develop  their  trade  free  from  all 
unnecessary  restrictions;  the  government  should  deal  with 
abuses  in  regard  to  the  management  of  individual  ships  as 
they  arise  without  forcing  the  whole  shipping  industry  to 
comply  with  harassing  and  unnecessary  rules  and  regula- 
tions; in  British  ports  no  distinction  should  be  made  between 
British  ships  and  the  foreign  ships  which  come  to  compete 
with  us;  and  oversea  commerce  should  be  encouraged  by 
being  freed  from  all  unjust  burdens  and  hampering  restric- 
tions.   ...    Its  (the  Association's)  demands  have  been  for 


314         INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

scope  for  individual  energy  and  enterprise — for  a  fair  field 
and  no  favors.  And  the  Association  has  not  stood  alone. 
Its  policy  has  been  that  of  shipowners'  organizations 
throughout  the  country/ 

Even  stronger  is  the  statement  of  a  British  shipbuilder  in  the 
same  journal,  September  20,  1917,  page  472. 

There  is  really  only  one  way  in  which  the  state  can  assist 
shipbuilding  and  shipping  as  well.  That  is  not  by  active 
control  of  any  kind,  not  by  trying  to  direct,  and  manage 
and  boss,  but  by  removing  restrictions,  restoring  the  liberty 
which  has  had  to  be  sacrificed  temporarily  in  the  interests  of 
national  welfare,  and  by  following  deliberately  and  consist- 
ently a  policy  of  setting  the  science  and  art  of  shipbuilding 
and  marine  engineering  free  to  develop  along  their  own  lines. 
It  should  be  a  continuous  policy  of  knocking  off  shackles,  not 
of  fitting  on  new  control  levers.  Just  as  soon  as  it  is  proved 
that  anything  is  hindering  progress  a  strenuous  attempt 
should  be  made  to  have  that  thing  consigned  to  historical 
oblivion — whenever  this  can  be  done  consistently  with  na- 
tional interests. 

Probability  of  Government  Aid  in  Future. 

It  is  probably  true  that  the  love  of  independence  had  caused 
these  statements  to  be  rather  stronger  than  the  facts  warranted, 
for  the  figures  of  British  trade  and  shipping  for  the  period  before 
the  war  showed  signs  of  change  which  she  could  scarcely  view 
without  some  concern.  For  example  between  the  years  1904  and 
1913,  the  percentage  of  British  trade  that  went  in  British  ships 
declined  from  02.44  per  cent  to  50.15  per  cent.  Between  1904 
and  1912  British  foreign  trade  increased  55  per  cent;  that  of 
other  countries  increased  71  per  cent;  British  mercantile  tonnage 
increased  24  per  cent  and  that  of  other  countries  increased  45 
per  cent.-  In  view  of  these  declines  before  the  war  and  the  wtU 
known  destructions  during  the  war,  the  question  very  naturally 
arises,   ^'  Will  the  British  continue  their  policy  of  let  alone  in 

'  Fairplaw  October  4,  1917,  p.  549. 
*/6'd.,  September  27,  1917,  p.  513. 


SHIPPING    POLICY    AFTER    THE    GREAT    WAR  315 

shipping  matters  after  the  war?"  The  answer  depends  in  part 
upon  what  her  rivals  do.  That  there  will  be  rivalry  after  the 
war  may  be  accepted  as  a  foregone  conclusion.  Certainly  the 
British  shipowners  who  have  had  such  control  of  the  world's 
trade  are  not  going  to  relinquish  it  without  a  struggle,  and  to 
get  it  back  .there  must  be  a  struggle.  For  example,  in  the  year 
ending  June  30,  1914,  British  vessels  carried  78.4  of  the  coffee 
exports  of  Brazil,  all  others,  including  German,  carried  but  21.6 
per  cent.  W^ithin  three  years  time  the  ravages  and  rearrange- 
ments of  war  had  almost  exactly  reversed  the  percentage.  For 
the  fiscal  year  ending  June  30,  1917,  British  vessels  carried  but 
21.3  per  cent  while  others  carried  78.7.  Thus  neutrals  have  got 
all  of  Germany's  share  and  more  than  three-fourths  of  Britain's. 
Can  they  hold  it?  Can  the  British  get  it  back?  One  of  the 
British  lines  in  this  trade  after  regretfully  handing  ship  after 
ship  over  to  the  British  Government  service  and  seeing  its  trade 
go  to  neutrals,  laid  aside  in  the  middle  of  1917  a  reserve  of 
£250,000  sterling  "  for  protection  of  our  trades,"  which  on  being 
translated  means  war  fund  for  commercial  war  after  the  ending 
of  the  military  war. 

At  the  same  time  news  comes  from  Sweden  that  "  an  ocean 
liner  conference  has  been  formed  at  Gothenberg  to  prepare  for 
the  fight  against  foreign  competition  after  the  war."  ^ 

Norway,  the  while,  is  feverishly  striving  to  restore  her  depleted 
fleets  by  ordering  abroad  more  than  a  million  tons  of  shipping, 
in  which  she  follows  the  lead  of  the  belligerents  by  adopting 
vessels  of  standard  design. 

German  Policy — Government  Aid 

Before  the  war  Germany  was  the  best  examplar  of  real  national 
policy  on  the  face  of  the  globe.  She  used  government  aid  so 
consistently  and  successfully  that  her  fleets  grew  to  the  second 
place  in  the  world.  German  lines  kept  British  lines  completely 
away  from  German  shores,  and  it  is  very  significant  that  German 
lines  regularly  called  at  British  shores  and  even  carried  British 

'  K.  F.  Knudsen :  Glasgow  Herald,  December  29,  1917,  p.  37. 


SIC         INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

trade  to  British  colonies.  During  the  war  Germany  has  con- 
tinuously amazed  the  world  by  the  strength  and  the  efficiency  of 
her  national  organization  as  displayed  in  military  and  economic 
life,  and,  as  in  times  of  peace  she  prepared  for  war,  so  in  war 
she  is  preparing  for  peace.  As  early  as  the  middle  of  1916  ^  it 
was  reported  that  the  German  shipping  lines  were  combining  for 
fetter  organization  in  the  postwar  period,  that  from  700,000  to 
800,000  tons  of  shipping  had  already  been  built  to  replace  losses 
of  the  war,  and  that  some  of  this  new  work  even  included  big 
passenger  liners."  Early  in  the  war  there  were  consolidations  of 
German  and  of  English  lines  to  increase  efficiency.  In  Septem- 
ber. 1917,  a  correspondent  from  Hamburg  reported  advance 
plans  of  the  Commission  for  Transition  Economy — in  other 
words,  plans  for  postwar  economic  life.  The  commission  had  or- 
dered the  cancelation  of  all  old  vessel  charters,  and  that  all  new 
•ones  must  be  submitted  to  them  for  approval.  It  was  further 
ordered  that  German  ships  should  not  for  a  time  at  least  make 
voyages  between  neutral  countries,  such  as,  for  example,  between 
the  United  States  and  Brazil,  as  had  been  their  wont,  but  that 
they  should  be  limited  to  national  service.  To  make  the  ships 
more  effective  in  serving  national  need,  it  was  announced  that 
imported  luxuries  would  be  curtailed,  and  while  the  commis- 
sioners lamented  their  inability  to  duplicate  England's  control  of 
neutral  shipping  through  bunkering  privileges,  they  hoped  to  be 
al)le,  through  German  coal  at  Hamburg  and  Bremen,  to  have 
control  of  some  Scandinavian  ships.  Germany  also  announced  a 
policy  of  subsidizing  shipbuilding  after  the  war. 

Under  the  new  bill  subsidies  will  be  paid  for  new  ship- 
building on  the  basis  of  cost  of  building  before  the  war, 
the  government  paying  a  large  percentage  of  the  extra  cost. 
From  GO  to  80  per  cent  of  the  additional  cost  will  be  paid 
on  ships  delivered  in  the  first  three  yeais,  20  to  40  up  to 
the   seventh   to   ninth   year.    .    .    .     We   are   told   of   new 

'  Marine  Review,  July,  1916. 

=  For  an  account  of  German  shipbuilding  plans,  see  Official  Bulletin,  Jan- 
uary 11,  1918,  p.  12.  '  •> 


SHIPPING  POLICY  AFTER  THE  GREAT  WAR        317 

yards  projected  on  the  Elbe,  on  the  Baltic,  and  elsewhere; 
of  firms  which  were  struggling  before  the  war  being  recon- 
stituted with  fresh  capital,  or  taken  over  by  bigger  firms;  of 
shipyard  extensions  everywhere;  and — perhaps  equally  sig- 
nificant— of  the  financial  prosperity  of  existing  concerns. 
We  need  not  assume  that  German  shipbuilding  will  suffer 
to  any  extent  whatever  as  a  result  of  the  war/ 

Shipping  Policy  of  the  United  States — Protection  from 
Competition 

The  United  States  has  been  a  confirmed  landsman  for  fifty 
years  before  the  war.  We  knew  little  of  the  sea  except  that  it 
was  on  the  map,  and  we  have  solemnly  tried  to  treat  it  as  tliough 
it  were  land,  meanwhile  displaying  in  our  legislation  the  greatest 
ignorance  concerning  the  economic  aspects  of  the  life  and  the 
business  upon  it.  This  has  been  true  not  only  of  our  legislation, 
but  also  true  of  our  finance;  true  in  the  mind  of  the  average  citi- 
zen, in  the  public  print,  and  the  curricula  of  our  universities.  The 
dominant  fiscal  policy  of  this  vast  rich  country  has  been  to  pro- 
tect ourselves  from  the  competition  of  people  less  favorably  fixed 
than  ourselves.  This  protection  has  taken  two  forms :  first,  the 
protective  tariff;  second,  the  positive  exclusion  of  the  foreigner 
himself  from  our  shores,  in  so  far  at  least  as  it  has  applied  to  the 
Chinaman,  the  most  efficient  worker,  the  one  capable  of  coming 
in  the  greatest  numbers  if  we  would  permit  him  to  come.  Behind 
this  double  protection  of  tariff  and  exclusion,  our  scanty  popula- 
tion in  a  land  of  unexampled  riches  has  been  contented  and  rich. 
When  our  attention  was  called  to  the  sea,  we  have  appeared  to 
be  ignorant  of  the  fact  that  there  competition  reigned,  and  we 
have  tried  the  impossible  feat  of  projecting  our  protective  system 
into  the  realm  where  competition  really  does  prevail.  If  our 
maritime  policy  has  been  guided  by  desire  to  establish  an  i\meri- 
can  merchant  marine  upon  the  sea  in  any  volume  approaching  our 
own  needs,  we  can  not  apply  any  better  descriptive  adjective 
than  to  say  that  it  has  been  childish.     We  have  tried  to  apply 

^  Fairplay,  August  30,  1917,  p.  366.  See  also  London  Economist,  July  28, 
1917. 


318  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

the  protective  tariff  idea  to  shipbuilding  by  saying  that  no  ship 
should  fly  the  American  flag  unless  she  was  built  in  the  United 
States,  which  means  built  with  material  costing  more  than  our 
great  rival  Britain  uses,  and  by  men  whose  wages  are  higher 
than  those  of  the  men  who  build  the  rival  ships.  In  the  absence 
of  any  other  great  advantage,  this  fact  alone  is  final.  The  ship 
could  not  be  built  in  the  American  shipyard  and  has  not  been 
built  to  any  great  extent  when  it  had  to  compete  with  the  yard 
using  cheaper  materials  and  cheaper  labor.  Our  government  has 
sought  to  compensate  this  disadvantage  by  making  the  further 
restriction  that  no  foreign  built  vessel  should  ply  between  the 
ports  of  our  own  country,  thereby  restricting  the  coasting  trade 
to  the  expensive  American  vessel,  and  giving  us  perforce  enough 
shipyards  to  build  for  our  own  coasting  trade. 

Handicap  of  Restrictive  Legislation. 

To  further  handicap  our  merchant  marine,  our  legislation  at- 
tempted to  protect  the  American  workman  and  build  up  a  naval 
personnel  by  placing  further  costly  safeguards  about  the  crew 
(by  statute  largely  American  citizens).  This  again  puts  heavy 
cost  handicap  upon  the  American  vessel  that  would  compete  upon 
the  high  seas  with  the  ships  of  other  lands.  The  foreign  ship 
is  free  to  be  manned  by  Chinese,  Hindus,  Italians,  Scandinavians, 
British,  all  of  whom  work  in  their  home  country  for  less  than 
American  wages,  but  the  American  ship  must  have  a  large  pro- 
portion of  her  crew  naturalized  American  citizens,  thereby  guar- 
anteeing higher  wages  and  greater  cost.  Yet  further,  the  more 
expensive  standard  of  living  prevailing  in  America  is  guaranteed 
upon  our  ships  by  specific  provisions  in  the  shipping  law  that 
the  crew  shall  have  quarters  more  spacious  and  therefore  more 
expensive  than  foreign  ships  afford  their  crews,  that  the  Ameri- 
can crew  shall  have  food  better,  more  varied  and  more  expensive 
than  afforded  foreign  crews.  All  of  these  handicaps  in  crew 
give  the  following  very  interesting  comparison  of  actual  costs  of 
running  of  British  and  American  steamers  at  the  outbreak  of 
the  war. 


SHIPPING    POLICY   AFTER    THE    GREAT    WAR  319 

For  an  American  tramp  steamer  of  about  4,000  tons  the  total 
crew  cost  per  ton  per  month  was  65  cents.  For  a  British  tramp 
steamer  of  about  6,000  tons  it  was  sHghtly  less  than  one-fourth 
as  much,  or  16  cents. ^ 

The  details  of  these  costs  were  as  follows : 

AMERICAN  TRAMP  STEAMER  OF  ABOUT  4,000  TONS 

Per  Month 

Captain $200.00 

Mate    90.00 

Second  mate  60.00 

Eight  sailors,  $35  each   280.00 

Chief  engineer  150.00 

First  assistant    - 90.00 

Second  assistant   80.00 

Third  assistant 70.00 

Three  oilers,  $50  each 150.00 

Six  firemen,  $50  each  300.00 

Six  coal  passers,  $40  each  240.00 

Four  other  men  at  $35  each 140.00 

Total  wages  for  34  men   $1,850.00 

Food  at  75  cents  each  per  day 765.00 

Food  and  wages  for  4,000  tons   $2,615.00 

Food  and  wages  for  1  ton  $         -65 

[If  on  a  very  long  voyage,  according  to  the  United  States 
Government  and  union  sailors'  requirements,  third  mate  and  one 
or  two  more  men  must  be  furnished.] 

BRITISH  TRAMP  STEAMER  OF  ABOUT  6,000  TONS 

Per  Month 

Captain $90.00 

•Mate    4.5.00 

Second  mate  ?,r^n 

Six  sailors,  $17.50  each  105.00 

Chief  engineer   • cy^n 

Second  engineer    ^Qcln 

Third   engineer    ,^r■/^/^ 

Six  firemen,  $17.50  each 105.00 

Eight  more  men  at  $17.50  each   140.00 

Total  wages  for  26  men  ^o^con 

Food  at  34  cents  each  per  day  265.20 

Food  and  wages  for  6,000  tons  I^^^'i'^ 

Food  and  wages  for  1  ton  $      -lo 

[No  oilers  or  coal  passers  carried.] 

'  Marine  Review,  October,  1914,  p.  381. 


320  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Comparisons  with  Japanese  operating  costs  give  similar  results. 

We  took  a  record  of  three  ships,  an  American,  a  British 
and  a  Japanese.  The  wages  on  the  American  ship  amounted 
to  $39,242;  on  the  British  ship,  $15,096;  on  the  Japanese, 
$9,324.' 

These  figures  are  probably  extreme  but  true. 

Mr.  Nakahashi  Tokogoro,  ex-president  of  the  Osaka  Shoso 
Kaisha.  is  quoted  in  the  Philadelphia  Ledger,  February  15,  1918, 
as  saying : 

Some  Japanese  appear  to  entertain  apprehensions  of 
American  shipping  competition,  but  in  my  opinion  such  ap- 
prehensions are  entirely  unfounded.  There  is  no  need  of 
magnifying  American  competition.  It  is  true  that  America 
is  now  building  vessels  at  an  alarming  rate,  but  the  Japanese 
may  rest  assured  that  should  American  vessels  be  placed  on 
the  Pacific  in  competition  with  Japanese  ships  they  will  soon 
be  driven  into  a  corner. 

These  facts  help  to  explain  the  astonishing  absence  ^  of  the 
American  flag  from  the  high  seas  and  make  it  clear  why  the 
Pacific  Mail  Steamship  Co.  recently  sold  its  transpacific  vessels 
and  gave  up  the  competition  with  the  foreign  vessels  more  cheaply 
operated  and  also  subsidized. 

After  imposing  all  these  burdens  on  the  American  ship,  the 
American  Government  has  been  unwilling  to  make  any  financial 
equalization  by  the  payment  of  subsidies.  Therefore,  when  an 
American  needed  to  own  a  ship  he  would  usually  send  to  Eng- 
land for  it  and  have  it  registered  under  the  British  or  Norwegian 
flag. 

To  make  matters  worse  from  the  shipowners'  standpoint,  the 
La  Follette  shipping  bill,  apparently  aimed  to  protect  the  sailor 
against  the  impositions  of  shipowners,  has  put  in  provisions  mak- 

'  Marine  Review,  March,  1917,  p.  107. 

'"In  1913  a  total  of  2,593  vessels  entered  the  port  of  Buenos  Aires;  of 
these  1.325  were  English,  80  Norwegian,  57  Dutch,  225  German,  202  Argen- 
tine. 183  Italian,  159  French,  138  Uruguayan,  57  Austrian,  47  Spanish,  27 
Brazilian,  25  Swedish,  24  Belgian,  15  Greek,  13  Danish,  6  Russian,  2  Chilean, 
and  2  American."     {Marine  Review,  July,  1916.) 


SHIPPING  POLICY  AFTER  THE  GREAT  WAR        321 

ing  it  possible  for  the  crew  to  leave  the  ship  at  any  port.  It  is 
undoubtedly  true  that  there  has  for  a  long  time  been  injustice 
upon  the  sea  in  many  forms,  including  the  practice  of  shang- 
haiing sailors,  or  forcibly  recruiting  them  for  long  voyages  dur- 
ing which  they  are  bound  to  the  ship.  It  is  also  true  that  the 
ship  captain  has  been  virtually  a  miHtary  despot  in  his  little  realm, 
but  it  is  also  true  that  in  the  operation  of  a  ship  there  must  be 
discipline  which  approaches  the  military  in  its  implicit  obedience. 
Shipowners  are,  however,  indignantly  of  the  opinion  that  the 
present  American  statute  virtually  places  the  ship  in  the  hands  of 
the  crew,  and  that  as  long  as  they  are  able  to  leave  the  ship  at 
any  port,  the  vessel  may  at  any  time  become  merely  a  passenger 
steamer  for  the  crew,  and  the  problem  of  operating  her  is  greatly 
aggravated. 

It  is  easy  to  understand  how  all  these  provisions  for  controlling 
American  shipping  can  have  been  put  in  with  the  idea  of  afford- 
ing special  privileges  to  various  groups  of  people,  but  it  is  quite 
impossible  to  consider  them  as  having  been  enacted  by  persons 
who  knew  the  conditions  of  ocean  transportation  and  desired 
to  extend  American  mercantile  marine  to  a  point  where  it  would 
be  able  to  do  any  substantial  part  of  our  high  seas  carrying. 
Even  Mr.  J.  P.  Morgan,  founder  of  the  long  unfortunate  Inter- 
national Mercantile  Alarine  Company,  showed  that  he  did  not 
know  the  fundamental  facts  about  ocean  transport. 

On  a  par  with  the  above  evidence  of  the  American  lack  of 
appreciation  of  the  sea  is  the  recent  fantastic  claim  by  an  Ameri- 
can journal  claiming  to  be  a  marine  journal,  that  we  should 
build  ships  with  all  speed,  for,  since  Britain  with  a  population 
of  some  45,000,000  had,  when  the  war  broke  out,  20,000,000 
tons  of  merchant  shipping  we  should,  with  these  figures  as  a 
fair  ratio  of  what  a  maritime  power  needs,  have  somewhere 
between  40,000,000  and  50,000,000  tons  of  merchant  ship- 
ping— a  quantity  equal  to  the  combined  fleets  of  the  world  in 
1914. 

Whereat  the  British  maritime  journal  F airplay  editorially 
made  merry  as  follows : 


322  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

The  position  is  most  serious  for  those  who  hitherto  have 
snatched  a  precarious  livelihood  from  the  waters,  for,  with 
"  democracy  "  all  the  vogue  just  now,  it  naturally  follows 
that  what  applies  to  one  applies  to  all.  And  what  does  that 
mean?  Just  this :  that  if  China  had  a  fleet  based  on  "  a  fair 
ratio  of  what  a  maritime  power  needs,"  she  would  require 
steamers  aggregating  200,000,000  tons  gross.  Russia 
would  trot  along  with  86,000,000  tons;  India  would  mop 
up,  on  her  own,  157,000,000  tons.^ 

Merchant  Marine  of  United  States  at  Beginning  of  War. 

In  view  of  our  landsman  habits  and  point  of  view  it  is  there- 
fore not  surprising  that  the  Great  War  found  us  with  a  good  fleet 
of  coasting  vessels,  an  insignificant  fleet  of  high  seas  carriers,  and 
an  almost  complete  commercial  dependence  upon  the  foreign 
steamer  which  served  us  on  all  coasts.  Promptly  upon  the  out- 
break of  the  war,  we  sought  to  take  advantage  of  the  misfortune 
of  our  neighbors  by  changing  our  laws  so  that  foreign  ships  could 
register  under  the  American  flag,  but  within  a  short  time  the 
owners  of  more  than  three-fourths  of  the  world's  shipping  found 
it  impossible  to  transfer  a  vessel  without  national  consent,  which 
it  need  scarcely  be  said  was  rarely  forthcoming. 

Great  Britain  enacted  such  a  law  on  February  12,  1915; 
Austria-Hungary  issued  such  a  decree  on  August  27,  Den- 
mark on  October  8 ;  Germany  enacted  such  a  law  on  October 
21,  France  on  November  11 ;  Norway  issued  a  decree  on 
December  6,  Brazil  on  December  9,  and  Spain  promulgated 
a  law  on  January  9,  1916.  The  merchant  shipping  of  these 
countries  aggregates  33,900,000  gross  tons.^ 

The  fright  of  war  drove  this  shipping  to  the  American  registry, 
for  despite  the  greater  difficulties  of  operating  the  American  ship, 
the  high  freight  rates  made  any  cost  seem  inconsiderable.  These 
same  freight  rates  made  the  shipowners  of  America  join  those  of 
all  other  countries  in  the  mad  rush  to  the  shipyards  clamoring 
for  new  tonnage,  so  that  during  the  period  of  our  neutrality  our 

I  October  4,  1917,  p.  554. 
E.  T.  Chamberlain,  U.  S.  Commissioner  of  Navigation. 


SHIPPING  POLICY  AFTER  THE  GREAT  WAR        323 

shipping  increased  substantially.  Then  came  the  war  with  the 
commandeering  of  many  vessels  building  in  our  yards  for  foreign 
owners  and  finally  our  grand  campaign  of  national  shipbuilding 
regardless  of  cost  because  of  the  ever  increasing  menace  of  world 
domination  through  the  submarine. 

There  has  been  a  lot  of  loose  talk  about  our  capturing  the  ship- 
building business  after  the  war.  Here  is  one  fact  for  the  person 
holding  that  belief.  More  facts  are  not  needed  although  they 
could  be  produced.  Last  month  a  shipbuilder  on  the  Clyde  was 
paying  war  wages — "  bleeding  wages  "  he  called  them,  of  12s. 
6d.  for  a  certain  amount  of  work.  On  the  Delaware  the  builders 
were  paying  $7.50  for  the  same  work. 

Our  Future  Policy. 

What  are  we  going  to  do  when  the  w-ar  is  over?  Will  we 
return  to  being  the  international  landsmen  '.ependent  upon  for- 
eign ships?  If  we  do  not,  we  should  at  once  resign  ourselves 
definitely  to  the  recognition  of  the  fact  that  we  can  not  for  some 
time  to  come  expect  to  be  able  to  build  as  cheap  a  ship  in  our 
yards  as  can  be  the  case  in  Great  Britain. 

What  will  be  the  policies  of  England,  Germany  and  the  United 
States  with  regard  to  shipping  when  the  war  is  over? 

We  can  safely  say  that  w^e  know  Germany  will  do  whatever 
is  needed  to  get  ships,  several  million  tons  of  them. 

What  will  England  do?  It  should  not  be  forgotten  at  the 
present  moment  that  the  British  Government  is  building  ships 
with  all  its  might  and  operating  them.  How  long  she  will  keep 
on,  and  whether  or  not  she  will  stop  at  all  is  of  course  a  problem. 
On  one  thing  we  can  depend  with  great  certainty.  If  unaided 
industry  can  not  put  British  ships  upon  the  sea,  an  industry  aided 
by  government  will  do  so. 

The  second  fact  w'hich  we  should  place  alongside  of  this  is 
the  equally  unfortunate  one  that  a  Caucasian  democracy,  such  as 
the  United  States,  with  high  standards  of  living,  and  in  the  need 
of  trained  sailors  is  not  likely  to  have  its  ships  manned  by  Chinese, 
Japanese  and  Hindus.    Therefore  we  may  expect  the  continuance 


324  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

of  the  present  higher  cost  of  operating  the  more  expensively  built 
American  ship.  In  other  words,  if  we  are  going  to  have  a  large 
merchant  marine,  it  can  not  grow  up  without  substantial  govern- 
ment aid  of  some  sort.  This  is  the  more  likely  because  of  the 
probability  that  foreign  nations,  having  seen  the  vital  need  of 
ships,  will  more  strenuously  than  ever  strive  to  develop  their  own 
marines.  It  is  exceedingly  unlikely  that  we  shall  adopt  the  let- 
alone  policy.  The  nation  is  now  willing  to  pay  for  shipping. 
Therefore  the  real  question  is,  what  kind  of  assistance  shall  we  in 
America  extend  to  the  high  seas  shipping? 

The  Methods  of  Aiding  Shipping. 

The  methods  are  all  described  in  Chapter  V.  Shall  we  have 
mail  subsidy,  voyage  subsidy,  mileage  subsidy,  shipbuilding  sub- 
sidy, government  ownership  and  lease  or  government  ownership 
and  operation  ?  Of  this  last  there  has  been  little  experience,  but 
more  promise.  Canada  promises  to  do  it  after  the  war;  Aus- 
tralia is  doing  it  now,  and  has  tried  it  for  a  few  years  in  times  of 
peace  with  lamentable  financial  results.  We  should  not  lose 
sight  of  the  fact  explained  in  the  last  chapter  that  despite  all  this 
war  control  it  is  not  government  organization  or  business  man- 
agement that  is  managing  shipping.  Government  is  merely  con- 
trolling and  the  men  of  the  business  world  are  doing  the  actual 
managing  and  operating,  exercising  the  real  business  judgment. 

Few  businesses  offer  less  inducement  to  government  operation 
than  operation  of  steamships,  either  line  or  tramp.  It  is  a  busi- 
ness of  constant  change,  of  the  constant  exercise  of  judgment. 
Government  businesses  are  renowned  for  their  red  tape,  and  for 
their  development  of  checks  and  balances.  They  must  advertise 
for  bids,  and  give  due  notice  of  changes  in  the  rate,  etc.  In 
contrast  to  this,  the  ship  operator  sends  a  long  cablegram,  at  5 
P.M.  as  the  result  of  his  day's  business  and  observations.  He 
has  the  reply  in  from  London  or  Shanghai  the  next  morning  and 
makes  his  decision  on  the  spot.  I  fail  to  see  success  as  likely  to 
follow  the  methods  applied  to  national  ship  operation  by  the 
nephew  of  Senator  So-and-so,  or  the  appointee  of  General  This, 


SHIPPING    POLICY    AFTER    THE    GREAT    WAR  325 

or  Cabinet  Officer  That,  nor  yet  of  the  ambitious  young  man  who 
has  passed  a  Civil  Service  examination.  The  experience  of  West 
Australia,  a  democracy  admittedly  progressive,  intelligent,  and  of 
high  rank  among  the  governments  of  the  earth,  is  suggestive. 
They  ran  a  government  steamship  line  at  frightful  loss. 

Complicating  Factors  Controlling  Future  Shipping 

Policy 

While  we  will  probably  do  something  after  the  war  to  guar- 
antee a  considerable  amount  of  American  shipping,  it  would  be 
rash  to  predict  the  means  that  our  government  will  adopt.  That 
is  indeed  a  riddle  of  the  future,  and  the  choice  will  depend  upon 
a  complicated  group  of  interacting  factors  which  may  be  classed 
roughly  under  four  heads : 

(a)  State  of  the  national  consciousness  in  America,  Asia  and 
Europe. 

(b)  The  state  of  international  relations. 

(c)  Our  economic  problems  and  our  appreciation  of  them. 

(d)  Technical  transport  problems. 

Let  us  give  some  examination  to  each  of  these  factors. 

(a)   The  State  of  National  Consciousness 

Will  this  nation  legislatively  represent  largely  the  farmer  who 
says  this  overseas  business  is  none  of  our  affair  anyhow,  and  the 
thing  for  us  to  do  is  to  keep  out  of  it  and  let  the  foreigners  alone  ? 
That  would  give  us  a  compromise  policy,  or  worse,  a  changing 
policy  as  we  have  had  in  the  past.  Or  will  our  policy  represent  the 
National  Foreign  Trade  Council  point  of  view,  which  says  that 
America  should  have  a  merchant  fleet  capable  of  discharging  the 
following  functions : 

First.  It  should  increase  the  national  income  and  do- 
mestic prosperity  through  greater  facilities  for  the  sale 
abroad  of  products  of  the  soil  and  industry  of  the  United 
States,  through  the  importation  of  materials  indispensable 
to  life  and  industry,  and  through  the  freights  collected  from 
world  commerce. 


326  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Second.  It  should  maintain,  under  the  flag,  communica- 
tion with  distant  possessions. 

Third.  It  should  aid  the  national  defense  and  maintain 
commerce  during  war,  whether  the  United  States  be 
belligerent  or  neutral.^ 

It  is  highly  probable  that  we  will  as  a  matter  of  fact  have  a 
strong  and  effective  desire  for  more  marine  self-sufficiency,  more 
maritime  independence  than  we  have  had  in  the  prewar  period. 
Our  national  attitude  in  this  respect  will  be  greatly  effected  by 


(b)  The  State  of  International  Relations 

Who  will  win  the  war?  What  will  be  the  conditions  of  the 
peace  ?  What  will  be  our  attitude  toward  foreign  powers  ?  We 
must,  broadly  speaking,  find  ourselves  in  one  of  three  conditions : 

1.  Complete  international  ease.  There  is  the  hope  that  the 
war  may  end  in  some  kind  of  internationalism  that  will  enable 
the  nations  to  get  along  as  easily  with  each  other  as  do  the 
American  States.  In  that  case  our  desire  for  independence  in 
maritime  policy  will  be  weak.  The  foreign  ships  will  do.  They 
will  gladly  fight  in  the  future,  as  in  the  past,  for  the  privilege  of 
serving  us.  We  will  let  them  serve  us.  Witness  our  South 
American  trade  of  1914. 

2.  The  second  position  of  national  psychology  with  regard  to 
international  policy  will  be  one  of  slight  international  distrust 
such  as  we  had  in  the  prewar  period — just  enough  to  produce 
feeble  efforts  looking  toward  a  merchant  marine — the  contradic- 
tory policies  such  as  the  prohibition  of  the  import  of  ships,  and 
our  other  policies  that  made  it  impossible  for  us  to  have  American 
ships  in  any  numbers;  fitful  subsidies  soon  withdrawn,  then 
shamefacedly  camouflaged  as  under  the  first  Wilson  administra- 
tion, when,  for  political  reasons  we  dared  not  say  the  word  "  sub- 
sidy," but  were  feeling  around  for  the  same  results  with  a  policy 
of  government  owned  ships. 

'  Committee  on  Merchant  Marine  of  National  Foreiern  Trade  Council, 
January  25,  1917. 


SHIPPING    POLICY    AFTER    THE    GREAT    WAR  327 

3.  The  third  international  relation,  the  one  which  all  of  us 
dread,  is  that  the  world  shall  be  an  armed  camp  where  a  nation 
shall  feel  the  necessity  for  the  completest  kind  of  national  inde- 
pendence within  and  without  her  bounds.  That  means  a  strong 
mercantile  marine  with  the  government  back  of  it  with  some  form 
of  heavy  financial  support. 

(c)  Economic  Problems  and  Our  Appreciation  of  Them 

,  In  the  prewar  period  we  felt  small  pressure,  very  small  indeed, 
of  an  economic  nature  to  make  us  build  up  our  merchant  marine. 
Economically  the  need  was  not  great.  Our  goods  could  go  to 
almost  any  part  of  the  world  with  cheapness  and  with  reasonable 
speed.  The  English  and  German  steamers  went  regularly  from 
New  York  to  Rio  Janeiro,  whence  the  Brazilian  coasters,  by 
transshipment,  took  American  produce  to  every  little  port  along 
the  coast  line  of  that  extensive  country.  Similarly  the  British 
steamers  took  our  goods  to  Buenos  Aires,  and  coasters  and  river 
steamers  took  them  down  the  coasts  and  up  the  rivers  of  that 
country  and  her  neighbors.  The  American  owned,  English  reg- 
istered, fleet  of  liners  sailing  from  New  York  deposited  our  pro- 
duce at  Valparaiso  for  the  Chilean  and  other  coasters  to  take  to 
small  outports  not  reached  by  the  larger  vessels  of  this  line.  By 
one  transshipment-  there  was  steam  navigation  from  New  York, 
New  Orleans,  or  San  Francisco,  to  almost  every  port  in  the  world 
and  in  times  of  peace  the  rates  are  not  high.  Our  trade  has 
suffered  far  more  between  1900  and  1914  from  the  lack  of  the 
American  desire  to  please  the  customer  than  it  has  from  the  lack 
of  ships  to  get  the  goods  to  the  customer.  In  war  the  problem 
is  entirely  different.  The  foreign  ship  is  not  here  to  serve  us. 
The  English  registered,  American  owned,  lines  from  New  York 
to  South  America  have  long  since  been  withdrawn  for  the  serv- 
ice of  the  British  Government.  The  American  traders  are  taking 
what  they  can  get;  namely,  slow  tramps  at  a  fearful  rate  of 
charter.  If  these  lines  had  been  American  vessels,  they  would 
still  be  running  on  that  route  unless  perchance  the  government  had 
^aken  them  off  to  serve  more  pressing  national  need.     We  have 


32S  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

two  entirely  different  problems:  one  is  the  peace  trade  problem 
and  the  other  is  the  war  trade  problem. 

It  should  be  added  also  that  in  this  particular  war  we  have 
fared  better  than  would  possibly  be  the  case  in  some  future  war, 
for  the  reason  that  very  little  of  the  world's  shipping  was  enemy 
shipping,  and  most  of  the  world's  fleets  have  sailed  on.  It  is 
plain  that  the  fear  of  war  if  it  exists  is  a  mighty  factor  in  mari- 
time policy — even  the  wars  to  which  we  are  not  a  party.  But, 
if  we  are  a  party  to  the  war,  no  mercantile  policy  is  of  any  avail 
unless  we  have  naval  control  of  the  seas. 


(d)  Technical  Transport  Problems 

World  situations  hang  on  the  progress  of  invention  and  in- 
dustry. \\'hen  gunpowder  gave  man  cannon,  artillery  and  bom- 
bardment, the  walled  city  that  had  been  so  long  the  recourse  of 
man  that  it  had  become  his  vision  of  heaven,  no  longer  sufficed, 
and  the  great  metropolis  has  become  wall-less.  Similarly  the 
invention  of  the  submarine  has  entirely  realigned  the  world,  made 
over  man's  thought,  destroyed  old  international  law,  and  brought 
America  into  the  war.  Future  inventions  in  many  lines  may  be 
equally  revolutionary  in  the  political  and  economic  policy  of 
nations.  The  development  of  aerial  navigation  may  upset  all  our 
present  methods  of  thinking,  and  utterly  annihilate  all  old  con- 
cepts and  practices  with  regard  to  the  application  of  national  aid 
to  maritime  affairs.  The  old  policy  was  simple.  Do  something 
to  get  ships,  then  build  battleships  to  drive  enemy  navies  out  of 
the  way.  What  will  be  the  new  method  of  getting  and  protecting 
a  fleet  upon  the  sea?  It  will  depend  upon  the  state  of  the  sub- 
marine and  of  the  airship.  If  the  submarine  survives  then  the 
submarine  merchant  marine  is  a  natural  next  step.  Shall  the 
merchant  ship  of  the  epoch  of  the  triumphant  submarine  be  the 
simple,  surface-floating,  vulnerable  type  of  the  past,  or  shall  it  be 
submersible  ?  The  answer  to  this  question  depends  upon  the  pros- 
pect of  peace  or  war.  If  war  seems  imminent,  the  surface  ship 
might  be  worthless,  and  we  must  build  submersible  freighters. 


SHIPPING  POLICY  AFTER  THE  GREAT  WAR        329 

There  seems  little  reason  to  anticipate  that  a  submersible  freighter 
can  be  built  as  cheaply  as  a  surface  freighter.  That  being  the 
case,  we  possibly  face  a  period  when  the  privately  owned  ship 
may  disappear  except  from  coast  trades  whence  it  may  easily  run 
to  harbor  and  lie  up,  and  in  its  place  will  be  great  fleets  of 
expensive  submarine  freighters  which  can  only  be  built  and  oper- 
ated by  some  form  of  heavy  government  subsidy.  On  the  other 
hand,  the  airship  may  be  so  developed  as  to  change  all  ideas  con- 
cerning naval  operations  and  maritime  preparedness  both  eco- 
nomic and  military. 

Continuation  of  Shipping  Board 

Certain  it  is  that  prediction  today  is  impossible,  and  we  must 
look  forward  to  a  decade  or  two  when  we  may  need  the  nimblest 
of  machinery  for  readjustments,  both  legislative  and  material. 
Perhaps  maritime  matters  may  be  handled  best  as  they  are  today 
by  boards  of  men  exercising  degrees  of  discretion  which  in  times 
of  peace  are  only  exercised  by  legislators  in  session.  This  makes 
somewhat  reasonable  the  recommendation  of  the  National  For- 
eign Trade  Council  that 

Congress  establish  a  permanent  Shipping  Board,  composed 
of  five  members,  who  shall  be  men  experienced  in  shipping" 
and  foreign  trade.  This  board  shall  recommend  to  Con- 
gress such  revision  and  modernization  of  all  United  States 
laws  relating  to  ship^^'ng  as  it  deems  necessary,  and  shall  per- 
manently discharge  all  the  functions  of  the  federal  govern- 
ment relating  thereto.  This  board  shall  constitute  a  perma- 
nent advisory  body  empowered  to  recommend  to  Congress 
the  measures  necessary  for  the  maintenance  of  United  States 
shipping  upon  an  equitable  competitive  basis  with  other  na- 
tions, always  having  due  regard  for  the  maintenance  of 
American  standards  of  living  and  compensation,  and  keep- 
ing in  view  the  needs  of  the  national  defense  and  the  neces- 
sities of  the  foreign  trade.  To  this  end  the  board  should  be 
directed  to  ascertain  the  cost  of  construction  and  operation, 
rates  of  interest  on  shipping  mortgages,  insurance  rates,  etc., 
of  American  shipping  as  compared  with  that  of  other  na- 


330  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

tions,  and  it  should  be  its  duty  to  determine  what  Hne  of 
ocean-carrying  trade  shall  be  permanently  developed  under 
the  American  flag  for  the  benefit  of  the  foreign  commerce 
of  the  United  States,  and  to  recommend  methods  whereby 
such  lines  may  be  rendered  possible,  in  the  event  of  the  cost 
of  their  operation  preventing  effective  competition  with  for- 
eign services  in  the  same  zone/ 

The  Council  further  recommended  that  such  a  board  should  at 
once  take  up  the  question  of  advising  concerning  revising  mail 
contracts  with  South  America,  South  Africa,  Australasia  and  the 
Orient. 

In  considering  the  advices  of  this  National  Foreign  Trade 
Council,  we  should  of  course  remember  that  they  are  a  special 
group,  directly  interested  in  the  development  of  export  trade,  and 
therefore  good  shipping  service  from  our  ports  is  essential  to 
a  continuance  of  their  business.  They  further  recommend  that 
the  President  be  empowered  to  suspend  the  La  Follette  Seamen's 
Act  pending  investigation  and  that  their  permanent  Shipping 
Board — 

shall  likewise  report  upon  the  measures  necessary  to  render 
investment  in  American  shipping  safe  and  attractive  to  pri- 
vate capital,  and  to  increase  the  present  resources  of  our 
systems  of  credit,  as  by  the  establishment  of  mortgage  banks, 
to  supply  funds  to  the  shipping  industry  for  financing  the 
construction  of  tonnage,  and  to  throw  around  shipping  mort- 
gages such  protection  as  to  remove  any  apprehension  on  the 
part  of  investors  regarding  the  safety  of  shipping  proposi- 
tions. 

]\Iethods  of  Maintaining  American  Merchant 
Marine 

The  same  Foreign  Trade  Council  says  that  "  some  6,000,000 
to  10. 000,000  tons  of  steamers  of  various  sizes  and  types  would 
be  necessary  to  carry  GO  per  cent  of  the  (foreign)  trade  of  the 
United  States."  - 

'  3/nri/u-  Rcviczu,  Julv.  1916,  p.  247. 
'  Ibid..  November,  1917,  p.  385. 


SHIPPING    POLICY    AFTER    THE    GREAT    WAR  331 

Let  US  assume  that  we  will  maintain  that  much  ocean  tonnage 
through  some  form  of  government  aid.  We  shall  want  to  avoid 
waste,  we  shall  want  to  avoid  graft,  we  shall  Vvant  to  avoid  in- 
efficienc}-.  We  must  avoid  all  appearance  of  favoritism,  yet  we 
must  get  the  ships  and  have  them  run.  How,  considering  all  the 
intricacies  of  American  politics,  can  this  best  be  done? 

First,  government  loans  to  the  builders  or  operators  of  ships  of 
a  given  quality.  This  is  a  simple  and  easy  method.  There  is 
nothing  new  about  it.  It  is  identical  with  our  adopted  policy  of 
farm  loan  banks,  which  are  but  an  attempt  to  copy  the  practice  of 
Denmark,  Germany,  and  other  foreign  countries  which  promote 
the  building  of  pork  packing  houses,  creameries,  farmers'  barns, 
ditches,  and  all  kinds  of  agricultural  equipment  through  the  crea- 
tion of  organizations  permitting  with  government  aid  the  borrow- 
ing of  money  at  a  cheap  rate.  This  method  is  simple  and  easy 
to  apply,  and  is  a  substantial  assistance,  although  if  we  maintain, 
as  we  undoubtedly  will,  our  more  expensive  crew  conditions,  it 
will  probably  not  be  enough  to  enable  our  fleets  to  compete  with 
neutral  shipping. 

Second,  we  can  pay  definite  bonuses  per  ton  to  American 
builders  of  certain  kinds  of  shipping,  the  vessels,  of  course,  reg- 
istering under  the  American  flag  and  staying  there.  This  prac- 
tice, however,  might  be  expected  to  work  around  sooner  or  later 
to  the  government  ownership  of  shipyards.  Otherwise  someone 
is  likely  to  get  cheated.  In  one  condition  it  might  be  the  ship- 
builder, for  the  government  might  give  a  contract  for  the  build- 
ing of  a  lot  of  ships  that  would  occupy  the  yards  two  or  three 
years,  and  then  give  no  more  contracts.  The  capital  invested  in 
the  yard  might  be  almost  wasted.  If  the  shipyard  owners  guard 
themselves  against  this  by  adopting  the  practice  of  the  munitions 
manufacturers  who,  because  of  the  temporary  nature  of  their 
business,  expected  the  first  contracts  not  only  to  pay  profits 
but  pay  for  the  plant  also,  then  the  government  is  paying  too 
much  for  its  ships.  And  if  it  pays  enough  for  the  ships  to  pro- 
vide the  depreciation  funds  to  pay  for  the  plant,  it  ought  to  own 
the  plant.     Such  government  plants  might  be  operated  by  private 


332  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

concerns  just  as  tunnels,  subways  and  railways  are  sometimes 
owned  by  governments  and  operated  by  private  companies.  Such 
is  the  case  at  Hog  Island  today. 

Third,  government  ownership.  A  third  method  of  promoting 
shipping  would  be  for  the  government  to  own  ships,  which  might 
be  built  for  it  on  contract  in  its  own  or  private  yards,  and  hire 
these  ships  out  to  private  owners  to  operate  them  under  condi- 
tions prescribed  by  the  government.  This  indeed  is  the  policy 
of  the  present.  The  government  is  building  ships.  They  have 
also  bought  ships  and,  after  the  age-old  practice,  are  passing 
them  over  to  individuals  to  operate  on  time  charters.  This 
method  permits  vessels  to  be  hired  to  companies  that  will  agree 
to  carr}-  mail  over  certain  routes  at  certain  speed  at  certain  inter- 
vals.    The  same  applies  to  freight  lines. 

The  question  of  the  tramp  is  more  difficult,  because  the  opera- 
tion of  a  tramp  may  take  it  anywhere,  and  it  may  at  times  be  in 
ballast.-  The  French  method  of  putting  tramps  upon  the  sea 
by  paying  a  mileage  basis  has  proven  of  very  questionable  merit, 
because  the  government  has  actually  paid  for  what  might  be 
called  a  pleasure  jaunt  for  a  vessel  and  crew  going  from  nowhere 
to  nowhere,  at  government  expense  because  it  was  better  than 
tying  up.  It  seems  certain  that  either  through  loans  to  owners, 
or  building  subsidies,  or  certainly  by  chartering  its  own  ships,  the 
United  States  Government  could  do  something  to  put  an  Ameri- 
can tramp  with  its  expensive  crew  on  a  financial  parity  with  the 
Chinese,  Greek,  Scandinavian,  Norwegian,  or  British  tramp  with 
its  cheaper  crew. 

This  policy  of  government  ownership  in  which  England  and 
America  are  today  engaged  may  easily  continue  indefinitely  and 
crowd  private  ships  off  the  sea,  for  if  national  rivalry  once  gets 
started  and  we  subsidize  to  the  point  where  we  make  it  difficult 
for  the  neutral  to  compete,  then  he  may  start  to  subsidize  and 
make  it  impossible  for  us  to  compete,  unless  we  raise  the  sub- 
sidy. Thus  we  may  get  started  on  a  process  that  may  wind  up 
with  the  complete  nationalism  of  the  fleets  of  the  world  by 
making  it  impossible  for  the  unsubsidized  ship  to  sail.     Indeed, 


SHIPPING    POLICY   AFTER    THE    GREAT    WAR  333 

granted  the  continuance  of  government  ownership  in  any  large 
way  by  leading  nations,  its  complete  absorption  of  the  fleets  seems 
to  be  probable  rather  than  possible. 

Contrast  Between  Government  Ownership  and 
Government  Operation 

As  to  the  desirability  of  this  condition  there  should  be  pointed 
out  at  once  the  contrast  between  government  ownership  and  gov- 
ernment operation.  It  is  perhaps  a  feasible  matter  for  the  gov- 
ernment to  own  the  fleets,  for  some  board  to  say,  as  is  the  case 
today,  that  you  may  or  may  not  import  this  or  that  commodity, 
that  you  may  or  may  not  sail  your  ship  this  month  to  this  region 
because  we  need  to  send  the  ships  to  that  other  region.  Boards 
in  periods  of  stress  may  even  set  the  rate  of  shipping  as  they  do 
today,  but  it  is  to  be  hoped  that  the  world  may  be  preserved  from 
that  epoch  when  both  liners  and  tramps  are  operated  as  an  arm 
of  the  government  by  officials  rather  than  by  civilians.  There 
is  an  inherent  impossibility  of  fusion  between  the  necessary 
checks  and  balances,  and  inevitable  red  tape  of  government  opera- 
tion of  anything,  and  the  endless  shifts,  overnight  decisions  and 
changes  of  plan  that  are  involved  in  that  world  reaching  maze, 
that  business  game  of  chess  that  guides  thousands  of  the  world's 
ships  to  the  hundreds  of  ports  to  move  the  world's  freight  in 
response  to  the  ever  changing  needs  of  business,  the  whims  of 
climate,  the  variations  due  to  the  failures  of  crops,  and  the  plans 
of  men. 

The  Postwar  Transition  Period 

No  matter  what  the  ultimate  policy  of  the  United  States,  her 
allies  and  enemies  may  be,  it  is  very  safe  to  predict  some  things 
about  the  period  of  transition  immediately  after  the  war. 

Enormous  Trade  and  Ship  Shortage 

It  will  be  a  time  of  enormous  trade  and  therefore  in  all  prob- 
ability of  ship  scarcity.     Before  the  war  the  world  was  getting 


334  IXFLUEXCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

along  with  42,000,000  tons  gross  of  shipping  and  building  about 
3,000,000  tons  per  year.  It  is  impossible  to  predict  the  tonnage 
at  the  close  of  the  war,  but  it  is  difficult  to  see  how  it  could  be 
an}  where  near  adequate  to  the  war  needs  or  the  postwar  needs. 
There  has  been  huge  ship  destruction  by  war,  and  almost  no  ex- 
tension of  peace  time  land  equipment.  Much  of  this  omitted  work 
is  cumulative  and  while  the  estimate  of  a  French  commission  that 
we  would  need  80,000,000  tons  of  shipping  after  the  war  is  prob- 
ably too  high,  it  is  quite  likely  that  we  will  need  00,000,000  tons 
for  several  years. 

Continued  Control  for  a  Time  at  Least 

Even  if  it  were  universally  regarded  as  desirable,  it  is  plain 
that  it  will  not  be  possible  at  the  end  of  the  war  to  return  shipping 
at  once  to  the  freedom  of  individual  ownership  and  control  of 
1914.  The  small  amount  of  shipping,  and  the  great  amount  of 
possible  freight  to  move  will  make  it  necessary  for  some  compre- 
hensive intelligence,  then  as  now,  to  decide  what  trade  shall  be 
permitted,  and  what  trade  shall  be  prohibited.  Otherwise  we 
would  be  making  duplications  of  that  astonishing  episode  of  1917 
when  a  full  cargo  of  rhododendrons  w-as  taken  into  a  port  of 
France,  famishing  for  bread,  meat,  cotton,  oil,  lumber,  and  coal. 
For  many  months  after  the  last  torpedo  and  bomb  are  fired,  the 
shipping  controllers  and  the  war  trade  boards  will  continue  to 
control  the  trade  and  the  ships  of  Britain,  of  France,  of  the 
United  States,  and  of  Germany  also,  as  already  long  since  an- 
nounced by  that  thoroughly  planning  people. 

If  the  government  did  not  keep  a  firm  hand  on  shipping  and 
trade,  that  is  to  say,  if  she  gave  liberty  to  the  shipowners  who 
have  a  monopoly,  through  the  scarcity  of  their  commodity,  it 
would  make  sheer  robbery  of  the  public  by  the  freight  rate  exac- 
tions, and  the  crippling  of  industry  by  the  carriage  of  unessential 
luxuries  at  the  expense  of  the  fundamental  national  supplies  and 
raw  materials. 


SHIPPING    POLICY   AFTER    THE    GREAT    WAR  335 

Possible  Nationalisation  of  Shipping 

When  might  the  controller  resign,  and  hand  the  shipping  back 
to  individuals?  The  answer  is  simple.  On  that  day  when  ship- 
ping supply  catches  up  with  shipping  need.  On  that  day  laissc::! 
fairc  might  be  trusted  to  again  take  charge  of  the  world's  trade 
without  serious  injury  to  any  trade  or  class  of  people.  So  much 
for  classes  of  people,  but  national  interests  can  not  be  forgotten 
now.  It  is  one  thing  to  say  that  on  that  date  the  shipping  con- 
trollers could  resign,  but  will  the  nations  have  them  do  so  ?  This, 
indeed,  is  hard  to  predict.  Why  should  not  the  governments 
permanently  keep  extensive  control  of  shipping?  Railroads  have 
been  steadily  approacJiing  the  period  of  their  nationaliza- 
tion. Why  should  not  shipping,  which  renders  the  other  half 
of  the  carrying  service,  enter  also  into  the  class  of  controlled  or 
operated  public  utilities?  There  is  no  final  answer  to  this  ques- 
tion except  the  one  of  effectiveness  and  expediency.  It  is  signifi- 
cant that  the  Canadian  Government  recently  announced  that  the 
merchant  ships  now  built  or  building  with  public  money  will  be 
kept  by  the  government  and  operated  after  the  war  as  a  public 
utility  in  connection  with  the  publicly  owned  railroads.  It  is 
well  known  that  Germany  has  used  her  publicly  owned  railroads 
to  promote  her  export  trade  by  carrying  export  goods  at  low 
rates,  the  government  repaying  any  losses  on  this  sort  by  freight 
rates  on  other  goods  or  even  by  direct  taxation.  There  is  noth- 
ing impossible  at  all  about  the  nations  keeping  their  ships  indefi- 
nitely and  even  operating  them  if  they  will  at  some  cash  loss, 
just  as  they  now  operate  warships  or  a  small  post  ofiice,  or  as  a 
large  railroad  system  operates  an  unprofitable  branch  line,'- 

^  A  question  of  public  morals  enters — graft.  Great  are  the  opportunities 
for  graft  that  lie  in  the  way  of  controllers  of  shipping  and  licensers  of 
exports  and  imports.  The  shipping  world  is  full  enough  of  it  already.  We 
threaten  to  increase  it  by  all  this  permission  and  control.  The  mere  securing 
of  an  export  license  from  the  United  States  War  Trade  Board  in  1917  and 
1918  has  sometimes  been  worth  a  fortune.  You  could,  for  instance,  buy  an 
inexpensive  commodity  at  a  government  controlled  price  of  3^  cents  per 
pound.  Famished  foreigners  stood  in  line  for  the  privilege  of  paying  you 
18  cents  a  pound  for  it.  How  much  could  the  unprincipled  afford  to  give 
the  licenser  to  issue  the  license? 


336  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Period  of  Overproduction  and  Depression 

The  second  thing  that  may  be  predicted  about  the  transition 
period  after  the  war  is  overproduction  of  shipping,  a  slump  in 
rates  and  a  great  and  probably  prolonged  depression  in  the  world 
of  shipping/ 

During  the  postwar  famine  when  the  British,  French,  Italian 
and  American  Shipping  Boards,  Controllers,  etc.,  are  holding  the 
rates  down  by  authority  on  the  home  trades,  there  will  in  all  prob- 
ability be  some  Scandinavian,  Greek  and  surplus  British  steamers 
wildcatting  on  the  sea  for  the  highest  bidder,  who  may  be  our 
present  enemies.  The  freights  will  be  fortunes.  Everybody 
will  be  tempted  to  get  some  ships  to  reap  the  golden  harvest. 
Ship  owning  is  a  business  with  a  lot  of  the  gambler's  chance  in  it. 

It  would  be  hard  indeed  to  find  another  business  so  speculative. 
It  is  affected  by  things  entirely  beyond  the  control  or  prevision 
of  the  shipowner.  It  is  a  work  in  which  a  man  must  observe 
and  come  to  his  intellectual  conclusions  and  then  bet  his  busi- 
ness, almost  his  whole  fortune,  on  his  opinion.  Thus  in  July, 
191G,  a  man  offered  a  steamship  for  two  years  at  24s.  6d,  per 
ton  per  month,  but  owing  to  the  then  scarcity  he  insisted  upon 
having  .'Jos.  per  month  if  the  charter  was  for  one  year  only." 
In  March,  1917, "''  a  charterer  offered  a  shipowner  12s.  per  ton 
dead-weight  per  month  for  a  period  of  five  years  after  peace 
was  declared,  or  he  offered  him  8s.  per  ton  per  month  for  ten 
years  after  the  war.  In  view  of  the  fact  that  4s.  was  a  good 
rate  before  the  war,  these  figures  indicate  one  man's  faith  in 
the  long  duration  of  high  freight  rates,  but  it  is  only  one  man's 
faith. 

The  history  of  shipping  during  and  after  the  Boer  War  gives 
good  reason  for  us  to  expect  a  period  of  overproduction  of  ship- 
ping, with  unemployment  of  ships  and  therefore  conditions  mak- 
ing unprofitably  low  freight  rates.  That  insignificant  military 
enterprise  in  South  Africa  which  lasted  for  two  years,  1899  to 

'  Marine  Review.  March,  1917. 
'  l^airplaw  January  4,  1917.  p.  36. 
•  Ibid.,  .Slarch  15,  1917,  p.  444. 


SHIPPING    POLICY    AFTER    THE    GREAT    WAR  337 

1901,  was  conducted  6,000  miles  from  the  British  base,  there- 
fore requiring  a  relatively  enormous  amount  of  shipping.  The 
consequent  scarcity  and  high  rates  gave  the  shipowners  two  years 
of  golden  harvest.  Every  shipyard  on  earth  was  busy  building 
ships  for  the  speculative  owners  who  wished  to  get  new  ships 
to  do  the  business  while  the  freights  were  good.  What  hap- 
pened was  the  joint  release  of  a  great  number  of  new  ships  and 
a  great  number  of  old  ships,  so  that  in  the  early  months  of  1901 
rates  fell  with  a  crash,  and  it  was  years  before  they  were  re- 
stored to  coriditions  where  the  tramp  steamer  could  make  a 
suitable  profit. 

Despite  the  fearful  famine  of  the  present,  the  danger  of  over- 
production following  this  war  is  perhaps  greater  than  was  the 
case  during  the  Boer  War.  We  have  a  greater  ship  farnine, 
therefore  greater  rates,  therefore  a  greater  temptation  to  the 
speculator,  for  at  the  present  time  a  man  can  pay  for  a  ship  in 
a  voyage  or  two.  Hence  the  almost  irresistible  temptation  to  try 
to  get  new  ships  that  may  be  upon  the  sea  at  least  long  enough 
for  three  or  four  voyages  before  the  crash  comes,  at  which  time 
the  lucky  owner  may  have  his  vessel  clear  and  perhaps  even  some 
profit  to  boot.  The  longer  this  war  lasts  the  greater  will  he 
the  capacity  of  shipyards.  We  will  need  about  four  to  five  mil- 
lion tons  a  year  and  will  have  a  capacity  for  several  times  that. 
Hence  the  shorter  the  time  in  which  building  can  catch  up  with 
need.  It  is  almost  unthinkable  that  when  that  balance  is  at- 
tained it  can  be  maintained  without  a  slump  in  freight  rates  that 
drives  them  down  to  the  rather  oft-reached  point  where  vessels 
must  wait  at  the  buoy  for  returning  prosperity;  especially  is  this 
situation  probable  because  of  the  likelihood  of  a  feverish  period 
of  reconstruction  and  speculation  between  the  end  of  hostilities 
and  the  usual  collapse  that  follows  a  war  and  its  resulting  com- 
mercial disturbance.  A  surplus  of  only  two  per  cent  of  shipping 
sends  rates  to  the  bottom. 


338  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

IVImt  SJiall  be  Done  ivith  Shipyards? 

^^'hen  shipbuilding  has  caught  up  with  need  the  world  faces 
the  certainty  that  something  like  half  of  its  shipyards  must  go 
out  of  commission,  for  there  will  be  no  earthly  need  of  the 
ships  unless  nations  shall  deliberately  build  them  and  lay  them 
aside  as  they  do  rifles  in  an  armory.  That  would  merely  post- 
pone for  a  few  years  the  shutting  down  of  shipyards/  Which 
\ards  shall  shut  down  ?  Under  the  order  of  competition  it  would 
be  the  yards  with  the  higher  costs  per  ton  that  will  be  shut, 
namely,  the  yards  of  America,  of  Italy,  not  the  yards  of  Britain, 
Holland,  or  Norway,  or  perhaps  of  Germany.  Then  we  shall  be 
face  to  face  with  this  question :  Now  that  the  war  is  over,  fleets 
are  restored,  most  of  the  first  industrial  wounds  are  he?.led,  what 
shall  we  do  with  our  shipyards?  What  shall  be  our  policy  with 
shipping?  Will  we  let  it  go  to  the  foreigner  across  the  sea? 
Will  we  have  mail  subsidy,  freight  voyage  subsidy,  mileage  sub- 
sidy, building  subsidies?  Shall  the  government  own  ships  and 
lease  them,  or  shall  it  own  ships  and  operate  them? 

We  should  not  lose  sight  of  the  fact  that  the  present  policy  of 
the  Go^vernments  of  the  United  States  and  the  United  Kingdom 
is  the  strongest  possible  policy,  namely  building  ships  and  hand- 
ing them  over  to  shipowners  to  run.  This  is  easy  while  the  rates 
are  mountain  high.  It  will  not  be  so  easy  when  the  rates  go 
down.  Postwar  policy  will  therefore  probably  be  less  national- 
istic than  the  present. 

'  The  great  fabricating  plant  at  Hog  Island  has  40  temporary  ways  of 
wood  and  10  permanent  ways  of  reinforced  concrete. 


CHAPTER  XII 
World  Shipping,  World  Organization,  World  Peace 

Our  Unified  World 

The  world  is  one.  Ships  have  made  it  so.  Not  only  is  the 
world  one,  Imt  it  has  also  grown  big,  very  big,  and  suddenly  all 
because  of  ships  and  a  safe  sea.  One  hundred  and  twenty-five 
years  ago  the  black  flag  of  the  pirate  was  the  dread  of  the  men 
who  went  down  to  sea  in  ships.  The  man  who  took  an  oceanic 
journey  straightened  u-p  his  earthly  affairs  and  bid  his  friends 
a  solemn  farewell — and  for  good  and  sufficient  reason.  In  that 
day  trade  was  a  luxury.  The  countries  of  the  world  tended  to 
be  economically  independent.  They  had  to  be  so.  The  land 
that  could  not  furnish  the  materials  for  essentially  economic 
independence  remained  unused.  Men  clustered  along  the  shores 
of  the  sea  and  navigable  rivers  in  that  comparatively  small  part 
of  the  world  where  resources  were  reasonably  complete.  The 
middles  of  the  continents  were  mostly  empty  because  they  could 
not  trade  even  the  little  that  was  necessary.  Iowa.  Kansas, 
Dakota,  the  plains  of  the  Argentine  which  have  for  decades  been 
the  granaries  of  the  world,  were  then  the  possession  of  savages 
and  wild  animals,  this  too  when  the  white  man  had  been  in 
possession  of  the  shores  of  all  these  continents  for  at  least  three 
centuries.  It  is  only  in  the  last  hundred  years  of  steam  and  a 
sea  clear  of  pirates  that  man  has  begun  to  possess  and  utilize  the 
earth. 

This  century  of  steam  and  a  free  sea  has  given  us  a  world 
trade  which  enabled  the  struggling  settlements  along  the  shores 
of  America  to  increase  their  numbers  twentyfold  within  a  little 
more  than  a  century.  Europe  has  also  gained  enormously  in 
population,  as  has  South  America,  Africa,  Asia,  Australia.  Be- 
cause of  this  world  ship  business,  men  have  clustered  in  places 

339 


340  IXFLUEXCE    OF    THE    GREAT    WAR    UPON    SHIPPING 


where  it  was  good  to  live.  They  have  ckistered  in  such  numbers 
that  they  could  no  longer  live  upon  the  produce  of  the  land  in 
which  they  dwelt,  so  that  -England  and  Scotland,  Holland  and 
Norway.  Italy,  the  Rhineland,  in  fact  all  West  Europe  from  Nor- 
way to  Greece,  had  l^ecome  dependent  upon  the  sea  trade.  With- 
out it  the>-  could  not  eat.  Even  their  cows  depended  upon  antip- 
odean hay:  witness  the  export  of  baled  alfalfa  from.  Chile  to 
Britain. 

America  and  Japan  have  also  entered  into  the  world's  trade 
and  the  world  dependence.  New  England  can  no  more  feed  her- 
self than  can  old  England,  and  the  United  States  finds  itself 
using  each  year    more  and  more  things  from  overseas. 

The  Prize  of  Peace 

The  continuance  of  this  world  trade  is  the  prize  of  peace, 
which  has  enabled  us  to  multiply  by  bringing  to  us  the  raw 
materials  for  the  physical  life.  The  cost  of  war  is  the  probable 
ending  of  this  trade,  the  starvation  of  peoples,  the  reduction  of 
population,  the  partial  emptying  of  Belgium  and  Britain,  yes, 
perhaps  of  New  England  also,  and  the  driving  of  lands  back  to 
the  isolation  and  scanty  population  of  the  days  of  sailing  ships 
and  pirates.  Ample  proof  of  this  is  shown  by  the  plight  of 
Norway,  Switzerland,  Holland,  Belgium,  now  that  war  threatens 
to  abolish  their  trade.  Still  more  positive  proof  is  given  in  Ger- 
many's hope  of  ending  the  war  by  starving  England  through 
stoppage  of  trade.  Another  possible  alternative  is  trade  under 
such  dictation  as  a  world  conqueror  might  give.  Such  tribute, 
such  servility  as  the  Kaiser  could  enforce  through  the  control 
of  the  world  trade  on  which  our  life  depends!  The  thought  is 
sickening! 

World  trade  had  not  produced  its  final  good  results.  It  was 
but  beginning.  The  starvation  of  millions  must  accompany  the 
ending  of  sea  trade,  as  war  threatens  to  end  it,  but  the  prize 
of  peace  is  greater  than  the  mere  continuation  of  the  w^orld  of 
1914.     The  age  of  machinery  has  not  reached  its  maximum.     It 


WORLD    SHIPPING,    WORLD    ORGANIZATION,    WORLD    PEACE        341 

is  in  its  infancy.  We  had  not  developed  world  trade  to  its 
maximum.  It  had  but  started.  The  four  hundred  million  people 
of  Europe  are  not  its  final  joyous  product  of  life.  The  one  hun- 
dred millions  of  the  United  States  are  but  a  handful  of  people 
compared  to  what  this  country  might  make  comfortable  and 
happy  if  we  but  reach  out  with  ships  and  bring  ourselves  the 
comforts  to  be  had  from  other  lands  across  a  free  sea. 

Scientific  Utilization  of  Resources 

We  had  just  begun  to  use  climate.  We  were  making  a  start  in 
the  habit  of  letting  men  live  and  manufacture  in  places  where  vigor 
grows  and  men  are  strong  and  energetic.  The  other  part  of  this 
new  world-habit  is  to  get  the  raw  materials  for  this  manufactur- 
ing man,  and  the  food  for  this  manufacturing  man,  from  parts 
of  the  world  that  are  not  so  good  to  live  in,  but  still  are  fair 
and  could  produce  much  product.  For  centuries  it  has  been  a 
rule-of-thumb  observation  that  the  man  of  the  cool  North  was 
energetic  and  the  man  of  the  Tropics  was  less  so.  The  findings 
of  science  and  the  studies  of  geography  ^  show  with  increasing 
clearness  and  put  scientific  reasons  back  of  the  historic  fact  that 
man  can  achieve  much  more  with  body  and  mind  in  the  vigorous 
climates  of  the  midtemperate  region  of  United  States,  Canada, 
Northwest  Europe  and  Japan  than  he  can  in  that  larger  part  of 
the  world  with  the  green  tropic  forest  as  yet  almost  unmarked  by 
the  hand  of  man.  The  millions  of  England  and  New  England,  of 
Holland  and  Belgium  and  New  York,  of  France.  Italy,  Japan, 
and  Puget  Sound,  are  but  the  forerunners  of  other  more  numer- 
ous and  more  comfortable  millions  who  can  live  in  these  good 
lands,  if  we  keep  a  free  sea  and  let  the  world's  trade  develop 
that  great  exchange  that  must  result  if  we  utilize  scientifically 
even  a  part  of  the  untouched  resources  of  the  far  places.  With- 
in a  generation  the  daily  life  of  millions  who  use  the  automobile, 
the  motorcycle,  the  bicycle,  rubber  hose,  and  the  other  myriad 
manufactured  forms  of  rubber,  a  product  of  a  tropic  tree,  has 

'  See  especially   Climate   and   Civilization,  by   Ellsworth   Huntington,  and 
Control  of  the  Tropics,  by  Benjamin  Kidd. 


342  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

become  dependent  upon  a  commodity  of  the  tropic  world  that 
can  only  come  to  us  through  ships.  It  is  but  a  type  and  a  fore- 
runner of  our  commercial  dependence  upon  this  great  undevel- 
oped zone.  There  we  find  fiber  plants  in  great  number,  most 
of  them  still  undeveloped  but  waiting  the  hand  of  the  scientific 
utilizer.  New  fruits  and  foods  are  also  coming  from  this  fecund 
warm  land.  Within  a  short  time  cocoa  and  chocolate,  from  an- 
other tropic  tree,  have  passed  into  everyday  consumption  and  the 
cocoanut  has  sprung  almost  overnight  into  a  position  of  enor- 
mous importance  as  a  fat  food  substitute  for  our  more  labori- 
ously produced  butter.  Following  it  comes  the  alligator  pear, 
another  tropic  butter  tree  that  may  soon  be  of  enormous  value  in 
the  food  supply  of  northern  lands.  If  the  supplies  of  wheat 
grow  short,  there  is  rice,  which  the  world  is  now  getting  chiefly 
from  the  tropic  swamps  of  Burma,  but  which  many  another 
tropic  swamp  can  be  made  to  yield.  If  we  still  need  other 
bread  substitutes  the  cassava,  and  sweet  potato,  the  taro 
and  other  starchy  tropic  roots,  easily  dried,  can  furnish  it  to  us 
in  unlimited  quantity.  The  age  of  machinery  now  beginning 
will  make  us  able  to  utilize  easily  the  now  almost  untouched 
Tropics.  As  man  conquers  this  warmer  world,  he  will  need 
every  machine,  from  steam  dredges  to  flying  machines.  The 
place  to  make  these  complicated  devices  is  in  the  cool  and  in- 
vigorating North,  the  middle  of  North  America.  Europe, 
China  and  Japan,  lands  which  may,  with  the  development  of  the 
manufactures  which  science  now  makes  possible,  shelter  almost 
unbelievable  millions  of  manufacturers,  farmers,  lumbermen, 
miners,  all  busy,  and  partly  fed  with  the  trade  of  the  Tropics 
and  the  other  less  desirable  parts  of  the  world,  which  are  marked 
by  nature  to  continue  as  the  producers  of  raw  materials  and  the 
purchasers  of  manufactures. 

World  Conquest  or  World  Government 

This   pictured    world    of    almost    countless    comfortable    mil- 
lions, with  plenty  of  food,  developing  trade,  education,  the  arts, 


WORLD    SHIPPING,    WORLD    ORGANIZATION,    WORLD    PEACE       343 

and  the  great  art  of  living,  can  only  inhabit  the  earth  if  we  can 
banish  from  it  permanently  several  conspicuous  characters  of 
history — Captain  Kidd,  Alexander,  Caesar,  Tamerlane,  Kaiser. 
Those  accursed  twins,  the  pirate  and  the  conqueror,  one  using 
government  as  a  sham,  the  other  boldly  flouting  it,  are  the  arch 
enemies  of  world  peace.  Man  is  by  nature  a  marauder,  a  con- 
queror. History,  if  we  take  the  history  of  the  race  and  take  it 
in  perspective,  is  a  sad,  sad  chronicle  of  almost  unending  maraud- 
ing conquest.  Why  did  the  prehistoric  Swiss  have  lake  dwellings, 
and  the  prehistoric  Spaniards  live  in  caves,  and  why  was  Rome 
built  on  seven  hills?  And  what  happened  to  Babylon,  Nineveh, 
Carthage,  the  Aztecs  and  Louvain?  There  is  one  answer — con- 
quest. Family  has  fought  family,  clan  has  fought  clan,  tribe 
has  fought  tribe,  people  has  fought  people,  until  the  number  of 
such  episodes  must  certainly  run  to  seven  figures  if  not  indeed 
to  seventeen.  Civilizations  as  far  back  as  the  last  seven  thousand 
years  have  risen  and  fallen  before  the  smashing  blow  of  some 
vigorous  band  of  rovers.  How  long  it  had  continued  in  the  pre- 
historic past  no  man  can  even  guess,  certainly  tens  of  thousands 
of  years.  Organized  society  only  arises  in  spots  easy  of  protection 
and  survives  for  a  time  until  attack  from  the  outside  becomes 
stronger  than  defense  from  within.  Thus  rich  America  was 
possessed  by  one  roving  band  after  another,  except  in  the  inacces- 
sible and  arid  plateaus  of  the  Southwest  where  cliff  dwellers, 
growing  a  meager  food  supply  in  some  narrow  irrigated  valley, 
climbed  up  a  trail  or  ladder  to  some  perilous  height  and  there 
protected  themselves  while  they  developed  the  most  advanced 
civilization  in  America.  Of  the  great  civilizations,  only  China  has 
had  a  long  history  and  that  because  nature  placed  her  in  a  situation 
with  marvelous  natural  protection  ^  where  the  people  had  so  little 
need  for  defensive  war  that  they  could  develop  pacifist  principles 
to  a  high  degree  and  make  them  not  only  an  ideal  but  a  practice — 
a  fortunate  result  of  a  favorable  location.  For  a  time,  the 
people  of  America  lived  in  the  same  Chinese  dream  of  Wash- 
ington's   farewell    address,    but    suddenly   the   machinery   made 

'  See  J.  Russell  Smith:  Industrial  and  Commercial  Geography. 


34-4  IXFLUEXCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

by  modern  science  once  more  strengthened  the  hand  of  con- 
quest. 

As  the  42  centimeter  gun  and  the  march  toward  Calais  ended 
England's  insular  isolation,  so  the  submarine  showed  America 
that  she,  too,  must  fight  or  submit. 

Pacifism  is  dead.  The  whole  world  must  defend  itself  or 
take  the  mercy  of  the  conqueror,  which  history  shows  to  be  a 
scanty  mercy.  See  how  China  changes.  Pacifist  for  forty 
centuries,  she  now  has  a  military  academy  and  drills  her  sons 
in  Western  war  tactics  because  the  steamships  and  the  railroads 
of  the  Western  peoples  have  shown  her  that  her  isolation  is 
ended,  that  the  conquerors  are  at  her  doors,  each  taking  a  slice 
of  her  territory.  She  knows  that  now  she  must  defend  herself. 
More  suddenly,  but  yet  more  completely,  has  the  same  thing 
happened  to  the  United  States,  upon  the  appearance  of  the  sub- 
marine, a  mechanism  of  conquest,  in  the  hands  of  a  people 
ambitious  to  dominate  the  earth  after  the  manner  of  Alexander 
and  Caesar. 

The  world  is  one.  It  is  one  in  trade;  it  must  also  become 
one  in  government.  The  most  serious  question  just  at  present 
facing  the  human  race  is  this:  whose  government  shall  it  be? 
Shall  we  have  a  recurrence  of  Caesar  and  Alexander  with  world 
empire,  world  dominance,  world  obedience,  world  tribute,  world 
submission,  or  shall  we  have  a  democracy  of  peoples,  each  free 
to  develop  its  bit  of  the  earth,  to  perfect  its  own  way  of  doing 
things,  to  trade  with  its  neighbors,  to  live  as  do  the  citizens 
of  any  well  ordered  community — tending  their  gardens,  train- 
ing their  children,  buying  and  selling,  coming  and  going  among 
their  peers,  obedient  to  no  one,  or  to  no  class,  but  obedient  to  the 
will  of  all? 

World  Thinking  and  the  Development  of  Government 

Our  thinking  must  grow  up.  We  have  developed  world  trade. 
world  investment,  world  enterprise.  Enterprise  must  not  run 
loose  and  uncontrolled  because  it  is  bigger  than  man's  mind, 


WORLD    SHIPPING,    WORLD    ORGANIZATION.    WORLD    PEACE        345 

or  rather  bigger  than  man's  habit  of  thinking.    We  have  been  try- 
ing to  run  twentieth  century  business  with  seventeenth  century 
thinking.     Our  mental  concepts,  our  mental  content,  our  men- 
tal habits,  like  the  vermiform  appendix,  are  of  an  age  long  past. 
We  can  make  a  scientific  machine  in  five  years  and  put  ii  to  work, 
but  it  is  a  slow  job  to  readjust  society  to  it.     We  must  develop 
world  thinking  and  world  government,  to  match  world  enter- 
prise, or  suffer.     After  all,  world  government  is  no  new  step, 
merely  one  more  step,  a  larger  development  of  an  old  process,  a 
process   of   regional   consolidation   that   accompanies   increasing 
powers  of  transport.     There  was  a  time  when  tliere  was  no  gov- 
ernment on  the  face  of  the  earth  bigger  than  the  family.     Then 
the  maximum  government  became  a   small  group  of    families, 
then  a  tribe,  until  finally  nations  were  born  and  they  have  risen 
and  fallen  for  millenniums  getting  ever  larger  and  larger  until 
now  we  are  faced  by  the  very  practical  demand   for  a  world 
nation,   which,   after  all,   is  but  one  more   step   in  the  age-old 
process  of  regional  consolidation.     A  recent  traveler  tells  us  of 
finding  a  hamlet  of  twelve  houses  in  the  Himalayas  so  far  re- 
moved from  neighbors,  trade  routes,  and  access  that  they  were 
absolutely  independent  of  all  mankind — a  little  world  in  them- 
selves.    A  little  more  than  one  thousand  years  ago  England  was 
seven  independent  kingdoms;    Wales  and  Scotland  a  number  of 
independent  rival  warring  clans.     Now  they  are  one.     France 
has  had  an  identical  history.     In  the  memory  of  men  still  living 
Italy  was  a  half-dozen  independent  governments  only  unified  in 
1S70.     Germany  is  a  conspicuous  case  with  scores  of  independ- 
ent states,  some  say  three  hundred,  a  few  centuries  ago;  twenty- 
seven  states  as  late  as  1870,  now  one  empire.    In  1787  the  United 
States  was  virtually  thirteen  independent  commonwealths,  and  the 
physical  and  intellectual  task  of  making  the  people  of  those  thir- 
teen  governments    function    as    one   government    in    1789    had 
greater  natural  difficulties  than  the  task  of  making  the  United 
States  of  the  World  out  of  the  ten  leading  Powers  in  1920.     As 
compared  with  the  ten  Powers  of  today  it  took  the  men  of  the 
thirteen  States  of  1789   far  longer  to  communicate  with  each 


34G  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

Other.  It  took  them  longer  to  exchange  their  products.  The 
freight  rate.  /.  c,  the  relative  cost,  was  greater  and  the  basis  of 
trade  and  economic  unity  was  less.  Just  as  our  ancestors  driven 
by  the  menace  of  chaos  made  one  nation  out  of  the  thirteen  in 
that  year,-  so  must  this  generation  repeat  the  step  and  make  one 
Power  out  of  the  leading  Powers  of  the  world.  Just  as  the 
thirteen  States  relinquished  the  possibility  of  exploiting  each 
other  through  war,  tariff,  trade,  and  financial  disagreement,  so 
the  nations  of  the  world,  if  they  would  keep  the  peace,  must 
stop  the  exploitation  of  one  regional  group  of  people  by  another, 
at  least,  where  the  exploited  is  strong  enough  to  disturb  the 
peace. 

Some  Conditions  of  World  Government 

To  make  this  world  organization  survive  several  conditions 
are  necessary :  first,  all  must  have  access  to  the  sea.  There  must 
be  no  more  cjuestion  about  the  right  of  a  people  to  have  free 
access  to  the  sea  than  there  is  about  the  right  of  man  to  have 
free  access  to  the  public  road  or  street.  It  may  cost  the  farmer 
something  to  get  a  lane  out  to  the  road,  but  he  has  it,  by  right 
of  law  and  eminent  domain,  and  he  pays  for  it  and  he  can  get 
it  and  pay  for  it  whether  his  neighbor  will  or  no.  So  Switzer- 
land and  Serbia  and  Poland  and  any  other  people  worthy  of 
independence  must  have  no  more  question  of  their  right  of 
commercial  access  to  the  sea  than  the  people  of  Ohio  or  Ken- 
tucky.    The  sea  must  be  free. 

Second,  we  must  reduce  the  temptations  to  war.  War  arises 
out  of  two  desires:  one  the  lust  of  dominion,  and  the  other  the 
desire  for  special  privilege  upon  the  face  of  the  earth.  There 
must  be  some  remaking  of  the  map  to  remove  subject  peoples 
from  galling  dominion,  as  in  Poland  and  Turkey.  Unfortu- 
nately it  would  jje  very  difficult  in  any  remaking  of  the  world 
map  to  exclude  all  the  reasons  for  special  privilege,  the  most 
precious  of  which  is  the  exclusive  possession  of  a  piece  of  the 
earth's  surface— the  right  of  a  people  to  have  a  country  and  rule 


WORLD    SHIPPING,    WORLD    ORGANIZATION,    WORLD    PEACE        347 

themselves.     This  unfortunately  is  alike  the  great  objective  of 
the  league  of  nations,  and  sometimes  also  one  of  the  greatest 
temptations  to  war.     The  possession  of  a  section  of  earth  by  a 
people  sometimes  brings  the  menace  of  land  hunger  that  arises 
almost   inevitably   when   two  peoples  know   each   other's   coun- 
tries have  different  densities  of  population,  or  to  be  more  ac- 
curate,  a  dift'erent  ratio  of  man  to  resources.     This   is   prob- 
ably the  greatest  cause  of  war.     It  has  cursed  man  since  long  be- 
fore  that   ancient   day,    when    the   hungry   band    of    Israelites 
marched  in  out  of  the  desert,  climbed  over  the  walls  of  Jericho 
and  put  her  people  to  the  sword.     Land  hunger  has  helped  to 
wreck  unoffending  peoples   from  the  days  of  Joshua  right  on 
down  to  that  black  day  four  years  ago,  when  heavily  peopled 
Germany  broke  like  a  dam  across  the  boundaries  of  sparsely 
peopled  France.     One  of  the  grave  menaces  to  eventual  peace  is 
any  people's  desire  to  keep  a  sparsely  peopled  land  alongside  a 
densely  peopled  land.     Especially  dangerous  is  the  white  man's 
desire  to  keep  his  land  white  and  to  exclude  the  yellow  man,  and 
the  black  man,  after  the  fashion  of  Canada,  Australia  and  the 
United   States  with  their  Chinese  exclusion  acts.     This  exclu- 
sion rests  on  force.     It  is  an  insult  and  a  dare,  yet  one  of  the 
things  that  we  hold  most  dear.     If  we  will  insist  upon  it,  as  per- 
haps we  shall,  we  must  mitigate  it  so  far  as  possible  by  the  aboli- 
tion of  tariffs,  which  by  free  exchange  of  commodities  will  do 
much  to  share  the  advantages  of  exclusive  possession  of  terri- 
tory and  reduce  the  need  which  densely  peopled  China  and  Japan 
must  feel  for  the  empty  lands  of,  the  white  man  in  Australia, 
California,  British  Columbia. 

International  trade  policy  thus  becomes  one  of  the  great 
cares  of  those  who  would  organize  the  world  for  peace,  and  per- 
mit man's  food  supply  to  increase. 

Tariffs  are  the  chief  factor  in  trade  policy.  Fortunately, 
of  the  two  reasons  for  tariffs  recognized  by  economists,  one  is 
passing  by  a  process  of  legislation  and  the  other  will  l^e  gradu- 
ally and  automatically  removed  in  exact  proportion  to  the  de- 
velopment of  the  strength  of  a  league  to  enforce  peace.     These 


348  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

two  reasons  for  the  tariff  are  (a)  the  necessity  of  starting  infant 
industries  which  can  be  started  by  bounties  as  well  as  by  tariffs, 
and  often  are  so  started,  and  (b)  industrial  completeness  neces- 
sary for  war. 

(a)  Closely  akin  to  this  infant  industry  argument  is  the 
protection  of  the  infant  industry  or  any  industry  in  any  country 
from  the  commercial  practice  of  dumping;  namely,  the  selling  of 
an  unsalable  surplus  at  less  than  cost  in  a  distant  market  to  avoid 
a  break  in  price  in  the  customary  market.  This  is  a  normal  ele- 
ment of  trade  demoralization,  and  it  may  also  be  deliberately  used 
by  the  producers  of  one  country  to  stifle  rivals  that  promise  to 
develop  competition  in  other  countries.  It  has  often  been  so  used. 
Fortunately,  however,  the  control  of  this'  undoubted  evil  can  be 
done  without  the  establishment  of  any  general  tariff  system.  It 
has  in  fact  already  been  recognized  by  the  legislation  of  Canada 
and  several  other  countries  by  the  establishment  of  anti-dumping 
statutes.  Under  these  laws  foreign  goods  may  not  be  sold  in  the 
country  of  import  for  smaller  prices  than  they  bring  in  the  coun- 
try of  production.  It  therefore  appears  that  the  establishment  of 
infant  industries  need  be  no  permanent  cause  of  friction  between 
countries,  provided  it  is  really,  as  it  claims  to  be,  a  bounty  for  the 
protection  of  infant  industries  during  the  period  of  infancy. 

(b)  The  second  reason  for  tariffs  is  a  much  more  potent  one, 
one  that  looms  particularly  large  in  the  present  moment;  namely, 
the  necessity  of  developing  a  variety  of  industries  in  the  attempt 
to  produce  the  astonishing  industrial  completeness  necessary  for 
war.  There  is  almost  no  limit  to  the  application  of  this  phi- 
losophy now  that  war  has  become  so  industrial.  Along  with  this 
idea,  we  should  never  lose  sight  of  the  fact  that  all  economists 
recognize  in  the  tariff  a  factor  increasing  the  cost  of  living  in 
the  country  possessing  it.  In  other  words,  tariff,  except  as  a 
starter  of  infant  industries,  tends  to  impoverish;  conversely, 
free  trade  tends  to  enrich  by  giving  the  importing  country  the 
advantage  of  the  specialization  that  may  be  developed  in  all 
other  countries.  As  an  example  of  the  impoverishment  of  tariffs, 
we  may  take  Portugal,  a  country  that  insists  upon  taxino-  everv- 


WORLD    SHIPPING,    WORLD    ORGANIZATION,    WORLD    PEACE        349 

thing  that  comes  into  its  bounds,  and  has  forced  the  cost  of  liv- 
ing up  to  a  fearful  level.  As  an  example  of  the  enrichment  of 
free  trade,  we  have  the  prosperity  of  England  and  Holland, 
with  cheap  supplies  and  a  low  cost  of  living  based  on  goods  from 
the  world's  cheapest  markets.  Hungry  Portugal  on  the  other 
hand  has  to  buy  in  one  of  the  high  tariff  markets  and  sell  along 
with  England  and  Holland  in  competition  with  all  the  world. 

At  the  present  moment  the  pains  and  perils  of  the  Great  War 
have  served  to  emphasize  the  importance  of  tariffs  as  factors 
aiding  the  industrial  completeness  necessary  for  national  defense. 
We  have,  however,  already  passed  the  point  of  the  possibility 
of  this  as  a  general  policy  for  the  nations  of  the  world.  We  have 
developed  population  and  trade  too  far;  industry  and  war  have 
become  too  complex  for  any  nation  to  hope  to  be  commercially 
independent,  even  if  its  variety  of  resources  is  as  great  as  that 
of  this  country.  Everyone  knows  that  England  and  Holland, 
France  and  Norway  are  dependent  upon  the  sea,  but  so  also  is 
the  United  States.  Our  steel  industry  with  its  whole  great  class 
of  war  supplies  can  be  ruined  by  cutting  off  imported  ores  used 
in  hardening  steel. 

We  tend  to  become  less  independent  rather  than  more  inde- 
pendent. The  development  of  science,  while  it  may  in  a  way 
develop  commercial  independence  of  nations,  does  so  only  as 
5  last  resort  of  discomfort.  Its  natural  tendency  is  to  develop 
an  ever  increasing  dependence  because  of  the  increasing  variety 
of  product  that  enters  into  our  daily  life.  Thus  China  for  ages 
was  a  complete  world  in  herself.  She  scorned  the  outside  world 
that  could  bring  her  nothing  she  herself  did  not  have.  But  as 
the  age  of  science  comes,  she  begins  to  want  our  machines  and 
our  specialized  productions.  That  is  typical  of  the  present  status 
of  the  economic  independence  concept. 

For  the  conduct  of  a  war  a  nation  needs  access  to  the  sea  or 
colossal  preparation  such  as  Germany  made,  followed  by  almost 
instantaneous  success,  such  as  Germany  did  not  get. 

Tariffs  can  not  make  us  even  in  the  United  States  independent 
in  war,  although  if  deliberately  used  for  that  purpose,  they  could 


350  INFLUENCE    OF    THE    GREAT    WAR    UPON    SHIPPING 

make  us  nearly  independent,  but  at  great  cost  through  high  living 
expenses  and  inefficient  industry. 

Every  year  science  is  making  military  completeness  less  possible, 
attack  more  deadly  and  isolation  more  impossible.  The  past  is 
gone;  along  with  it  isolation  is  also  gone.  The  world  has  given 
hostage  to  peace.  Our  century  of  world  trade  has  already  de- 
veloped the  degree  of  interdependence  of  nations  and  dependence 
on  the  sea  and  ships,  whereby  we  are  compelled  to  maintain 
this  commerce  or  lapse  back  to  a  past  epoch  of  small  population 
or  obedience  to  some  tyrant.  The  Revolutionary  motto,  "  Unite 
or  Die."  used  to  bring  the  American  colonies  together,  was  never 
more  applicable  than  today  and  now  it  applies  to  the  nations  of 
the  world.  We  must  unite  in  world  organization  with  a  free 
sea  permitting  a  great  world  trade,  or  start  into  an  epoch  of 
militarism  with  the  menace  of  being  united  by  some  world  con- 
queror taking  a  rich  world  tribute. 

We  can  not  hope  to  remove  from  man  the  lust  of  dominion, 
but  we  can  do  much  to  remove  from  it  an  admixture  of  the  de- 
sire for  land,  and  the  desire  for  trade  privilege.  We  can  not 
hope  to  remove  land  hunger,  but  we  can  greatly  dull  the  appetite 
by  establishing  freedom  of  trade,  which  will  still  leave  peoples 
free  to  develop  their  own  social  conditions.  By  this  mitigation 
of  desire  we  have  some  chance  of  organizing  the  world  so 
that  it  may  be  able  to  suppress  the  lust  of  dominion  and  this 
modified  land  hunger. 


INDEX 


Admiralty:  administrative  committees,  44, 
45,  153;  control  over  war  risk  insurance, 
56,  62;  charter  and  requisition  of  ships, 
153,  158,  164,  172;  functions,  1-",!),  170; 
control  over  shipbuilding,  245,  251,  254, 
255.  257;   officials,   200. 

Admiralty,  First  Lord  of  the,  2G0,  261. 
See  also  Geddes,   Sir  Eric. 

Aerial  navigation,  218,  328,  329. 

Africa:  line  traffic,  8;  tramp  traffic,  23; 
diagram  showing  vessel  movements  to 
United  Kingdom,  79. 

Allied    Maritime   Transport   Council,    218. 

American  International  Corporation,  285, 
286,  295,  306. 

American  international  Shipbuilding  Cor- 
poration, 285,  280,  300. 

American  merchant  marine:  condition  at 
beginning  of  war,  322-.323;  increase,  70, 
128.  144;  high  cost  of  construction  and 
operation,   72,   12!»;   government  aid,   126, 

■    127,    128,    130,    132-135,    144,    145;    re- 

.    quirements    for    flying   national    flag,    128, 

1  322;     free    ship    policy,     128;     State    ex- 

'  emption    from    taxation,    132;    mail    trans- 

.*.  portation,      133-135,      144;     officers     and 

*  sailors,  195-197;  requisition,  46,198-200; 

•  method  for  maintaining  after  the  war, 
330-333. 

Amundsen,  Captain  Raoul,  105. 

Archangel:    trade   of,    80,    100. 

Argentina:  early  results  of  cessation  of  ex- 
ports, 4.3,  77;  decreased  coal  supply,  77, 
107;  diagram  showing  vessel  movements 
to  United  Kingdom,  79;  jjaralysis  of 
trade,  80,  81;  trade  with  United  States, 
93,  107,  112,  119,  120;  German  firms 
in,  97,  107,  121,  122;  future  policy, 
311;    statistics,   80.  • 

Australia:  line  traffic,  8;  tramp  traffic,  23; 
grain  exports,  34,  43,  172,  201;  de- 
creased shipping,  77;  wheat  situation,  78; 
coal  exports,  78;  diagram  showing  vessel 
movements  to  United  Kingdom,  79;  food 
exports,  84,  8.5;  wool  exports,  80;  cotton 
imports,  91 ;  trade  with  United  States, 
93;  postal  subventions,  136;  government 
ownership   of   vessels,    .324,    325. 

Austria-Hungary:  jjcncil  trade,  91;  coasting 
trade,  126;  government  aid  to  ship- 
building, 120,  130,  131,  132,  136,  137, 
139,  149;   registry  legislation,  322. 

Austrian  Lloyd  Steamship  Co.,  130,  131, 
132,  136,  149. 

Auxiliary  cruisers,  130,  133,  134,  149, 
215. 

Baker,    Bernard   N.,  273,   274. 

Baltimore  Dry  Docks  and  Shipbuilding  Co., 

304. 
Barges,  198,  208,  209,  232,  233. 
Belgium:   government   war   risk  bureau,   59; 

food    rationing,    85;    news    print    exports, 

118;    government    aid    to    shipping,    126, 

127,   130,    131,   139,    151. 
Bethlehem    Steel    Corporation,    295. 
Black  list,  99,  121. 


Black  Sea:  food  exports,  84;  prohibition  of 
exports  to,  104;  German  trade  with,   148. 

Blockade,  British:  effect  on  marine  insur- 
ance, 55;  eff'ect  on  cotton,  5(5,  82,  97; 
effort  to  prevent  trade  with  Central 
Powers,  56,  97;  failure,  98,  99;  meas- 
ures  adopted   by   exporters,    99,    100. 

Blue  Book  rates,  40,  153,  154,  155,  156, 
157,  158.  169,  172  175,  170,  181. 

Board  of  Trade  (British),  117,  158,  159, 
174,  257,  259,  2(53;  president  of — see 
Runciman,    Sir   Walter. 

Boer  War,  20,   123,  330,  337. 

Bounty — sec  Subsidies. 

Bowles,  Rear  Admiral  Francis  T.,  297,  .302. 

Brazil:  trade  with  United  States,.  11,  16, 
78,  !)3,  106,  113;  diagram  showing  vessel 
movements  to  United  Kingdom,  79;  gov- 
ernment aid  to  shipping,  140,  151;  coffee 
exports,    ,315. 

Bristol,   Pa.,  shipyards,  226,  285. 

British  Manufacturers  Corporation,  116, 
117. 

British  merchant  marine:  national  value, 
42;  blockade  of,  at  outbreak  of  war,  73; 
government  aid,  120,  127,  130,  132-135, 
140-144;  effect  of  free  ship  policy,  128; 
loans  to  companies,  130;  mail  transporta- 
tion, 133,  141;  requisition  of,  158,  109, 
172,  173.  178,  180;  government  control, 
172-184;  finances,  170-180;  registry  legis- 
lation, 322;  statistics,  246,  255. 

British  Trade  Corporation.    110.   117. 

Bulgaria:  subventions,  140;  imports,  148; 
railways,   148. 

Canada:  prewar  trade,  12,  23;  trade  with 
United  States.  93,  103;  government  aid 
to  shipping,  136,  137,  143,  144;  govern- 
ment ownership,  324,  335. 

Canals:  reimbursement  of  dues,  131,  132; 
in   Germany,   140. 

Capps;'  Rear  .'\dmiral  Washington  Lee,  281- 
283,  285,  286,  290,  291,  293. 

Cement  ship — see  Concrete  ship. 

Central  America:  line  traffic,  8;  trade 
paralysis.   81. 

Chamber  of  Commerce  (U.  S.),  questions 
concerning  ship  control,    190. 

Chemical  products:  cessation  of  German 
exports  of,  82;  American  export,  83; 
American  development  and  protection  of 
industry,    113,   114. 

Chile:  diagram  showing  vessel  movements 
to  United  Kingdom,  79;  nitrate  business 
of,  82,  90;  trade  with  United  States,  93; 
subventions,   140,   151. 

China;  line  traffic,  8;  shipbuilding  in.  .37; 
cotton  cloth  imports,  90;  trade  with 
United  Slates,  93;  German  firms  in,  121; 
size  of  cotton  bale  in,  215;  war  prepara- 
tion, 344. 

Clark,   F.  H.,  275,  276,  278,  279,   293. 

Clyde    Line,    212. 

Clyde   .Steamship   Owners   Association,    171, 


351 


352 


INDEX 


Clyde  yards:  standardized  vessels  built  in, 
220,  257;  proposal  to  close,  245;  women 
workers,   250,   253;    government  officials, 

260.  „     ^     . 

Coal:  prewar  shipment.  6,  <;  increase  in 
price  ;n,  SI;  British  control.  41,  44, 
11"  100  170.  .SI  2.  323;  British  exports, 
777'  lOC!  170;  pooling  of  cnrs,  47; 
United  States  exports,  ii,  10.5,  lOb; 
American  control,  112,  108,  20 (,  108, 
200;  statistics,  77.  ,„_,„_ 

Coasting     trade:     reservation     of.     l-u-l-i. 
145,     140;     restrictions     of,     142,     1(1; 
British      control,      171;      restrictions     re- 
moved, 103;  American  control,  108,  200. 
Colby,   Bainbridge,   2S3,  204. 
Collins   Line.   135,   144. 

Commerce  before  the  war:  tramp  ship 
traffic,  5-7;  line  traffic,  8;  prevention  of 
competition.  0-16;  results  of  agreements, 
10;  necessity  for  government  interfer- 
ence. 17;  ocean  freight  rates,  18-23; 
freight  depression  of  1014,  23;  interna- 
tional competition,  24,  25. 
Competition,  prewar  prevention  of:  rate 
agreements,  0;  division  of  territory.  10; 
division  of  traffic,  11;  pooling  of  freight 
money,  11;  outside_  carriers,  12;  in- 
formal agreements.  15. 
Composite   ships,   230. 

Concrete  ships:  comparison  with  standard- 
ized steel  ships,  210,  231;  history  of 
concrete  in  shipbuilding,  231-230;  meth- 
ods of  building,  230,  237;  launching, 
237;  advantages,  237-230;  disadvan- 
tages, 230-241;  Lloyd's  approval,  241; 
present  I'nited  States  program,  241-243; 
success,  300.  . 

Contraband:   uncertainty  regarding,  50,  0(; 
refusal  of  United  States  to  insure  vessels 
carrying,  60,  67;  ships  searched  for,  07; 
changes  in  lists.  07. 
Convoy   system.   171,   202.   203,   204. 
Corrugated  ships,  218,  lilO. 
Cotton:    freight   rates,   22,   31;   condition   in 
Southern    States.    43,    40,    56,    82,    07; 
effect  of  blockade  on.  50.  82,  07;  insur- 
ance,   67;    decline    and    recovery    of,    82; 
British    export    of    manufactures    of,    00; 
manufactures  in  Japan,  00.  01;  American 
conference  concerning,  108;  reduction  in 
size  of  bales,  215. 
Cramp's  shipyard,  208. 

Cunard  Line,  85,  130,  133,  134,  140,  141, 
142. 

Dardanelles,  34,  75. 

Defense  of  the   Realm  Act,   102,   174,  249. 

Dc  Lanoy.  William  C,  50. 

Denman.  Urn..  2.30,  273,  274,  275.  277, 
270,  280.  205. 

Denmark:  line  traffic.  8,  150;  difficulty  in 
securing  raw  materials,  38;  coal  agree- 
ments, 41 ;  government  war  risk  bureau, 
50;  decreased  coal  supply,  77;  food  im- 
ports, 83,  84;  trade  with  Germany,  08, 
00;  government  aid  to  shipping,  126, 
127.  130.  132,  130.  150;  concrete  boats, 
233. 

Diagrams:  movement  of  grain  from  River 
Parana.  -7;  vessel  movements  to  and 
from  L^nitcd  Kingdom,  71»;  effect  of  war 
on  mcrcliant  shipbuilding,  205;  shipbuild- 
ing capacity  of  United  States.  1914- 
1018,  208. 

Diesel  engine,  275. 

Donald,  John  A..  273.  280. 


Eagles,  218. 

East  Indies:  coal  supply,  78;  coasting  trade, 
126. 

Egypt:  line  traffic,  8;  port  congestion, 
35;  decreased  coal  supply,  77;  cotton 
cloth  imports,  90;  size  of  cotton  bale, 
215. 

Elder-Dempster  Line,  134.  141. 

Emergency  Fleet  Corporation:  recruiting 
service,  195;  creation  of,  by  Shipping 
Board,  270,  300;  functions,  270,  277; 
officers,  276,  283,  200,  205-208;  con- 
flict of  authority,  290;  contracts,  280, 
285.  286.  300;  delays,  205;  movement 
to  Philadelphia,  207;  houses  built  by, 
302;    statistics,    287,   note,   3. 

Entrepot  trade,  reduction  of.   86-88,   101. 

Eustis.   F.  A.,  275,   278,   27O,_203. 

Exports:  prewar  conditions,  5;  American 
licensing,  45,  105,  112,  113;  prohibition 
of,  to  Central  Powers,  75,  07;  decline  of 
European,  82,  00;  British  government 
control,  103,  104,  100,  107:  .American 
control,  45,  103,  105;  eff'orts  to  ex- 
pedite, 210,  215;  administrative  agencies, 
105;  •statistics,  77,  80.  92,  93. 

Fabricated  ships,  225-227,  257-259,  275, 
276,   292,   298,   305,  note  3. 

Federal   Shipbuilding  Co.,   304. 

Female  labor:  in  munitions,  248;  in  ship- 
building, 45,  250,  252,  253;  admission 
to  trade  unions.  248;  comparison  with 
that  of  men.   253. 

Ferguson,  Homer,   289.   290,   297.   200. 

Ferro-Concretc   Shipbuilding   Co..   242. 

Ferris  ship  design,   227,  >279,   288,   note   1. 

Flying  boats — see  Aerial  navigation. 

Food:  effect  of  production  and  consump- 
tion of,  on  trade.  74,  75;  government 
control  of,  70,  102.  105;  effect  of  war 
on,  8.3-85;  demand  for,  92,  207;  Ameri- 
can exports  of,  94;  British  blockade.  97; 
German  supplies,  99;  British  control  of 
imports,  102;  Norwegian  restrictions, 
101;  export  licenses,  45,  105;  statistics, 
108. 

Food  Administration   (U.  S.),  105,  293. 

Food  Controller:  British,  102,  107;  Nor- 
wegian.  109. 

Ford,  Henry,  218,  305,  306. 

Fore  River  Shipbuilding  Co.,  295.  297. 

Foreign  vessels:  admission  to  national  reg- 
istry, 128,  129,  144,  146,  187.  322;  sub- 
ventions to.  139,  140;  legislation  con- 
cerning, 187,  188;  admission  to  Ameri- 
can coasting  trade.  103;  commandeered 
by  United  States,  283. 

Fougner  Steel  Concrete  Shipbuilding  com- 
^  panics,  234,  236. 

France:  prewar  agreements  among  liners, 
12;  port  congestion,  35.  36,  161,  162, 
184;  neglect  of  shipbuilding.  38;  gov- 
ernment war  risk  bureau,  59;  dyestuff 
imports,  83;  food  imports,  83,  109;  food 
control,  85,  110;  drug  exports,  89;  trade 
with  United  States,  93,  05,  100;  entrepot 
trade  to,  101;  trade  restrictions,  104, 
110;  trade  after  the  war,  117;  news  print 
exports,  118;  government  aid  to  shipping, 
120.  127.  120-133,  130-139,  148,  149; 
increase  in  imports,  1.50;  use  of  British 
ships,  181,  182;  exchange  of  vessels  with 
United  States,  201 ;  concrete  rowboat  of, 
2.31,  230;  American  vessels  built  for, 
260. 
Free   ship   policy,    128. 


INDEX 


Freedom  of  the  sea:  prewnr,  5,  0;  effect 
of   war,   20. 

Freight  rates:  fixed  agreements,  9;  mini- 
mum rate  agreements,  10;  pooling  of 
income,  11;  deferred  rebates,  12,  21; 
cutting  of,  13;  informal  agreements,  15; 
tramp  and  liner  comparison,  18-2;$;  low 
rates  of  1914,  2o;  inlluence  of  war  on, 
30,  31,  53,  58,  151,  1(58;  British  control 
of,  39,  158,  170,  17ti,  180;  American 
control  of,   191,  192,  199,  200. 

Fuel  Administration  (U.  S.),  112,  283, 
note. 

Geddes,  Sir  Eric.  41,  45,  261,  262,  263. 

German    East   Africa   Line,    135,    146,   147. 

German   Levant   Line,    135,    140,    147. 

Germany:  |)rewar  situation,  13,  24;  grain 
exports,  30;  steel  exports,  38,  127;  Amer- 
ican control  of  shipments  to,  45;  war 
risk  bureau,  59;  chemical  products,  82, 
89;  food  imports,  83;  disappearance  and 
replacement  of  ships,  85,  86,  121,  188; 
war  trade,  90,  97,  148;  cotton  imports, 
97;  news  print  exports,  118;  coasting 
trade,  120,  140;  government  aid  to  ship- 
building, 120-130,  133-135,  145148, 
315;  trade  with  Levant  and  Far  East, 
129,  135,  140,  147;  concrete  boats,  231, 
232,  2,34,  239;  preparation  for  the  future, 
312,   315-317. 

Goethals,  Geo.  W.,  227,  2.30,  274,  278, 
279,  285,  287,  290,  293,  300. 

Gold:  effect  of  war  on  supply  of,  50;  ship- 
ment of  checked,   72. 

Government  aid  to  shipping:  reservation  of 
coasting  trade,  125-127;  exemption  from 
import  duties  on  shipbuilding  materials, 
127;  admission  of  foreign  built  vessels 
to  national  registry,  128,  129,  144,  140, 
187;  preferential  railway  rates,  129,  130; 
loans  to  shipowners,  1.30,  1.31,  143;  re- 
imbursement of  canal  dues.  1.31,  132; 
exemption  from  taxation,  132;  postal  sub- 
ventions, 132-137;  subsidies,  137-139; 
subventions  to  foreign  steamship  lines, 
137;  summary,  140-152;  influence  of 
war,    152. 

Government  shipyards:  American,  193,  226, 
285,  280,  293.  299,  300.  305,  322; 
British,  244,  246,  254,  255,  258,  201, 
284-280. 

Government  war  risks  bureaus:  formation 
of,  in  various  countries,  59;  United 
States,  59-62;  Great  Britain,  62-65; 
Japan,  65,  00;  Norway,  06;  rates,  67; 
effect  on  private  companies,  67;  com- 
ments,  68-70,   72. 

Grain:  diagram  showing  movement  of,  27; 
Norway's  need,  30,  108,  109;  effect  of 
closing  of  Dardanelles,  34;  Australia's 
trade.  4.3,  201;  imports  and  exports,  84, 
95,  102;  American  crops,  84;  British 
control   of,   102. 

Greece:  line  traffic,  8,  85;  grain  supplies 
for,  .34;  formation  of  government  war 
risk  bureau  in,  .59;  insurance  rates  from 
United  Kingdom  direct  to,  65;  decreased 
coal  supply,  77;   food  imports,  S3. 

Guatamala:  export  of  cattle  prohibited  by, 
103;  government  aid  to  shipping,   151. 

Gulf  ports:  trade  of,  201. 

Hamburg-American    Line,    10,    11,    14,    24, 

135,  145. 
Harlan  &  Hollingsworth,  295,  298. 


Harris,  Rear  .Admiral  Frederick  R..  282, 
290,  291,  290,  298. 

Hog  Island  shipyard:  built  by  United 
States  government,  226;  contracts  with, 
285,  286,  299;  delays  at,  293,  298,  300; 
housing  conditions,  302;  maximum  out- 
put, .305. 

Holland:  line  traffic,  29;  difficulty  in  se- 
curing raw  material,  39;  government  con- 
trol of  shipping,  41;  enemy  trade,  4:>. 
45,  98,  99;  insurance  rates,  69;  coal 
supply,  77;  food  imports,  84;  cotton  im- 
ports, 87,  91;  East  Indian  produce,  87; 
trade  with  United  States,  9.3;  ships  com- 
mandeered by  United  States,  102,  107, 
194;  government  aid  to  shipping,  120, 
127,  130,  136,  151;  cement  ships,  231, 
233,   235. 

Holt    Line,    222. 

Hough   type  of  wooden   ship,   276. 

House,   Col.   E.   M.,   213,   294. 

Houston,  R.  P.,  103,  164. 

Hurley,  Edward  N.,  210,  212,  note,  280, 
283,  288,  307. 

Imports:  shortage  in  Great  Britain,  101; 
government  control,  102,  105.  106,  112, 
158,  167;  exemption  from  duties  on  ship- 
building materials,  127.  146,  147;  li- 
censes, 105,  106,  158,  167;  reducing  bulk 
of,  215. 

India:  line  traffic,  8;  grain  exports,  34; 
insurance  rates,  .52;  food  exports,  84,  85; 
cotton  bales.  21.5. 

Indian  Conference,   169. 

Insurance,  marine:  condition  at  beginning 
of  war,  28,  49,  52,  73;  dependence  of 
trade  on,  49;  development  in  England, 
50;  development  in  United  States,  51; 
relation  of  war  risk  to,  51,  52;  pro- 
hibitive rates  at  beginning  of  war,  52; 
causes  for  high  rates,  53-56;  fluctuation 
of  rates,  50,  57;  inadequacy  of  capital 
of  private  companies,  58;  government  war 
risk  bureaus,  59-70;  relation  to  world 
trade,  70;  growth  since  1914  in  Ignited 
States,  71;   lessons  taught  by  war,   71-73. 

Insurance  rates:  increase  in,  50,  52,  54, 
58;  effect  of  war  on,  52-50,  58;  govern- 
ment  control,   60,    60,    67. 

Insurance,  war  risk:  formation  of  govern- 
ment bureaus,  59;  United  States  bureau, 
59-61;  British  bureau,  62-65;  Japanese 
plan,  65,  66;  Norwegian  plan,  67;  rates, 
67;  effect  on  private  companies,  67-69; 
continuation  after  war,  69. 

Interallied   Chartering   Committee,    183. 

Interallied   Conference,  184. 

Interior,  Secretary  of  the,   114,  214. 

International  Mercantile  Marine,  42,  note, 
177,   212,   321. 

International  relations  after  war,  326;  eco- 
nomic and  technical  problems  arising, 
327,   328. 

Interstate  Commerce  Commission,  189,  191. 

Iron  and  steel:  Japanese-American  agree- 
ment concerning,  37,  42,  107,  301;  dif- 
ficulty of  obtaining,  38,  254;  control  of 
industry,  44.  103,  253,  2.54,  300;  raw 
materials   imported,    113.    214. 

Isherwood,  J.  W.,  ship  design  of,  228,  2o8, 
note  4. 

Italy:  line  traffic,  8,  86;  port  congestion, 
35,  36,  87;  government  war  risk  bureau, 
59;  decreased  coal  supply,  77;  diagram 
showing     vessel     movements     to     United 


354 


INDEX 


Kingdom.  70;  wool  imports.  87;  trade 
with  United  States.  f)3;  trade  with  Ger- 
many, rt.'i;  news  print  exports.  ITS;  Kov- 
crnment  aid  to  shipping.  SG.  126  127, 
l.'Ui  1:58.  l."?!).  140;  auxiliary  cruisers, 
14!>;  use  of  British  ships,  182;  concrete 
ships.  231.  232. 

Japan:  line  traffic.  8.  138.  130.  150;  agree- 
ment concerning  steel  with  United  States, 
37,  42,  107.  301;  government  war  risk 
plan,  rio,  fl.^.  fiCi;  rates  on  cargoes  in 
Japanese  hulls,  GO;  gains  in  trade.  00-02, 
ll.S;  cotton  manufactures.  00.  01;  toys, 
01;  statistics,  02;  trade  with  United 
States.  03;  government  aid  to  shipping, 
01.  126,  136,  138.  130.  150;  war  profits, 
170;  purchase  of  American  ships,  188; 
Pacific  trade,  200;  comparison  of  ship 
operating  cost  with  American  and  British 
ships,   320. 

Java:  sugar  in,  43;  diagram  showing  vessel 
movements  to  United  Kingdom,  70. 

Kitchener.   Lord.  240. 
Kosmos  Line,  131,  140. 

La  Follette  Seamen's  Act,  ,188,  320,  330. 

Labor:  shortage,  36.  161.  170.  251.  270, 
271;  situation  in  .\rgcntina.  SO;  British 
troubles,  170.  248.  2fi4;  British  __effo_rts 
to  better  conditions.  44,  101,  247.  250. 
''52  ■•50  264;  conditions  in  United 
States,  226,  271,  205,  301,  302;  housing 
conditions,  250,  301,  302;  education  of 
employes,  301.  See  also  Female  labor 
and  Trade  unions. 

Lake  vessels.  4S,  200.  201.  208,  233,  242. 

Lamport  &  Holt   Line,   10.  11. 

Legislation  affecting  shipping:  British,  156, 
H!2  167.  173.  174.  240;  .American,  187, 
iss!  lSO-101.  103,  318-321. 

Leyland    Line.    142. 

Licenses  for  trading:  British.  43.  158.  150. 
166.  167:  American,  45,  105.  202; 
French.  104;  administrative  agencies, 
1.50.   167.    171.    172. 

Line  traflnc:  development,  8;  prevention  of 
competition.  0-14;  informal  agreements, 
15-17;  influence  of  tramp  steamers  on 
rates.  20-22;  government  control  of,  42, 
46;   rerouting  of,   85.   86. 

Liverpool  Shipowners  Association,  161,  313. 

Lloyd   George,   David.   157.  252.   264. 

Lloyd's:  origin  and  development.  50.  51; 
temporary  closing,  53;  American  branch, 
71. 

Lloyd's  Register  of  Shipping,  116,  117, 
210,  note,  241,   251.   2.55   263. 

Loans  to  shipowners.   1.30,   131,   14.3. 

McAdoo.  \Vm.  Gibbs.   ISO,  note,  100. 

McCasscy,    Lynden,   2.51. 

M.icl.Ty.  Sir  Jos.-ph.  41.  167.  16S.  171.  172, 
173.    174.    175.    180,   256.    257. 

^L^il  transportation:  government  aid  to, 
132-137,  i:?0,  140.  144,  146,  14S.  140, 
15(». 

Marine    insurance — xcc    Insurance,    marine. 

Maxim.   Hiram.   230. 

Mediterranean:  insurance  rates  to,  5.5,  67; 
trade,  8.5;  searching  of  ships,  07;  pro- 
hibition of  exports  to.   104. 

Mediterranean    Conference.    160. 

Merchant  marine;  Australia.  S.  136;  .Aus- 
tria-Hungary. 126.  130.  131.  l.TJ.  136. 
137.   130.   140;    Belgium.   126.   Iii7.   130, 


131,  139,  151;  Canada,  23.  136,  143, 
144;  Denmark,  8,  126.  127,  130,  132, 
146,  150;  France,  12.  126.  127,  120- 
133  136139.  148,  140;  Germany,  13, 
24  '126-130,  133-135.  145-148;  Holland, 
•'O'  1''0  127,  130.  136,  151;  Italy,  8, 
86.'  126,'l27,  13(i-130.  140;  Japan.  8,  81, 
1''6  136  138,  130.  150;  Latin  .America, 
140'  151;  New  Zealand.  136.  140,  144; 
Portugal.  136,  151;  Russia.  S6.  126,  131; 
Scandinavia,  86.  126.  127.  130.  136, 
150;  Spain,  8,  126.  127.  1.30,  136,  139, 
151.  See  also  British  merchant  marine; 
American   merchant  marine. 

IMerchant  Shipbuilding  Corporation.   285. 

Mexico:  government  aid  to  shipping,  140, 
151,   152. 

Mines:   insurance  against  damage  by.   51. 

Money.  Sir  Leo  Chiozza,   175.   176.  221. 

ISIonzie,  M.   de,  35,  note   1,   181,   182. 

Morgan,  J.   Pierpont,  21.   321. 

Alosquito    craft,    21S.    244. 

^lotor  boats  to  fight  submarines,   218. 

Munitions.  Ministry  of:  control  of  iron 
industries,    44.    101;    officials,    2.53. 

Munitions:  rise  of  trade  in,  74;  legisla- 
tion, 162;  industrial  conditions,  247,  248; 
women  workers,   248,  253. 

Nansen,  Fridtjof,  46,  108. 

National  Foreign  Trade  Council,  325,  329, 
330. 

Navy  Department:  vessel  supply  for.  199, 
202;  representation  on  various  adminis- 
trative   agencies,    209. 

Netherlands — see    Holland. 

Neutrals:  trade  of,  42.  104,  158,  199; 
vessels  of,  commandeered  by  United 
States,  102,  107.  193,  194;  British  con- 
trol of  vessels,  41. 

Newark,  N.  J.,  shipyards,  226,  285,  296, 
305.  note  3. 

Newcastle  district,  shipbuilding  in,  245, 
251. 

Newport   News   Shipbuilding  Co.,  289. 

New  York  Shipbuilding  Co.,  295,  296,  299, 
303.  306. 

New  Zealand:  wool  exports,  43,  78;  cotton 
imports,  01 ;  trade  with  United  States, 
03;    subventions,    136.    140.    144. 

North  German  Lloyd  Line,  10,  12,  14,  131, 
133,  135.  130.  146. 

North  of  England  Steamship  Owners  As- 
sociation.   177.    180.    257. 

Norway:  line  traffic,  8;  shipping  needs,  30, 
34;  early  efforts  to  buy  ships,  37;  dif- 
ficultv  in  securing  raw  material,  38; 
prohibition  of  trade  with,  46;  govern- 
ment war  risk  bureau,  50,  66;  increased 
shi()i)ing,  77,  205,  .315;  coal  supjily.  77; 
diagram  showing  vessel  movements  to 
United  Kingdom.  70;  food  imports,  83; 
trade  with  United  States.  93.  108;  Ger- 
man trade.  9S.  09.  100;  German  pur- 
chase of  ships  from,  121;  government  aid 
to  shipping.  126.  127.  130.  136.  1.50; 
British  contracts,  179;  concrete  boats, 
233.  234,  236,  237;  American  vessels 
^  for.   260. 

Nova  Scotia:  government  aid  to  shipping, 
143. 

Ocean   Steam   Navigation   Co.,    133. 

Officers  and  crews:  insurance,  61.  64;  edu- 
cation. 10.5.  197;  comparison  of  wages 
of  British  and  American  tramp  steamers, 
319. 


INDEX 


355 


Pacific  :Mail  Steamship  Line,  144,  188,  320. 

Pacific  Sttam  Navigation  Co.,  133,  134, 
140,   141,   142. 

Paraguay:   drug  imports,   89. 

Parana  river,  diagram  showing  grain  move- 
ments  from,  27. 

Peninsular  and  Oriental  Steam  ^avlgatlon 
Co.,    140,    142. 

Peru:  news  print  imports,  118;  govern- 
ment aid  to  shipping,   ir>l. 

Piez,  Charles,  272,  290,  296,  297,  298,  307. 

Plate  River,  tramp  ships  rates  on  lumber 
to,  22;  food  exports,  84;  wool  business, 
87;   conference,   109. 

Pooling  operations:  freight  money,  11;  coal 
cars,  47;  traffic,  70;  railway  resources, 
205;  labor,   2.50,  259. 

Port  and  Transit  Executive  Committee,  159, 
161. 

Ports  and  harbors:  congestion,  34-36,  46, 
47,  48,  87,  98,  160-164.  184,  198,  204- 
209;  administrative  agencies,  48,  159, 
161,  163,  209.  212;  labor,  161,  162; 
government  control,  162,  163,  184,  212; 
causes  for  congestion  in  .America,  206; 
efforts   to   relieve,    198,   208,    209,   212. 

Portugal:  grain  supplies  for,  34;  food  im- 
ports, S3;  German  trade,  98;  postal  sub- 
ventions,  136,   151. 

Postwar  shipping  policy:  situation  at  end 
of  war,  308;  impossibility  of  general  na- 
tional independence,  310-312;  British  sit- 
uation, 313-315,  332;  German  policy, 
315,  316,  323;  .American  handicaps,  319- 
.321 ;  merchant  marine  of  United  States, 
321-323,  330-333;  factors  controlling  fu- 
ture, 325-329;  continuation  of  Shipping 
Board,  329.  330;  transition  period,  333- 
338. 

Postwar  trade:  war  products,  114;  govern- 
ment control  of  industry,  115;  British 
organization  and  plans,  116-119;  com- 
petition, 121,  122;  comments,  121-123, 
340-342. 

Preferential  railway  rates,  129,  130  147, 
148. 

Prince   Line,    10,    11. 

Raiders:  damage  done  by,  49,  53,  54;  in- 
surance against,  51;  effect  on  insurance 
rates,   53. 

Railways:  congestion,  46,  193,  205,  300; 
British  control,  112;  preferential  rates, 
129,  130,  147,  148;  American  efforts  to 
relieve  congestion,  198,  210;  consolida- 
tion  of  systems,    205;    car   shortage,    206. 

Reconstruction,  British  Minister  of,  116, 
117. 

Red    Star    Line,    142. 

Registry:  American  owned  ships  under  Brit- 
ish flag,  42,  327;  foreign  ships  admitted 
to  national  registry,  128,  129,  144,  146, 
187,   322. 

River  Plate  Conference,  169. 

River  traffic,   198. 

Riveters,   rivalry  among,   303,   .304. 

Royal  Mail  Steam  Packet  Co..  133,  142. 

Runciman,  Sir  Walter,  176,  221,  245, 
note   7,   259. 

Russia:  grain  exports,  .30;  effect  of  closing 
of  Dardanelles  on,  75;  decreased  ship- 
ping, 77;  small  trade  with,  78;  diagram 
showing  vessel  movements  to  United 
Kingdom.  79,  122;  new  steamship  lines 
of,  86;  trade  with  United  States,  93;  gov- 
ernment aid  to  shipping,   126,   131. 


Sailing  vessels:  government  control,  202; 
exchange  between  France  and  America, 
201;  on  Pacific  Ocean,  201;  standardized, 
220. 

San    Francisco   Shipbuilding   C9.,   235,    242. 

Scandinavia:  prewar  commercial  condition, 
8,  14;  enemy  trade,  43,  45,  96;  Arnerican 
lines  to,  86;  government  aid  to  shipi)ing, 
150;  war  profits,  179.  Sec  also  Nor- 
way, Sweden,   Denmark,  respectively. 

Schwab,  Charles  M.,  297,  298,  300,  302, 
303,  306,  307. 

Seamen's  division  of  War  Risk  Insurance 
Bureau,  61. 

Severn   River  yards,   269. 

Shipbuilding,  technical  development  of,  dur- 
ing war:  naval  work,  217;  merchant  ves- 
sels, 218;  corrugated  ships,  218;  stand- 
ardized ships,  219-i:28;  unsinkable  ships, 
228;  new  methods  of  construction,  229; 
new  materials,  230-24.3. 

Shipowners:  profits,  150-158,  173,  178, 
ISO,  1S5,  248,  255;  troubles,  15"4,  165, 
177-179,  181,  199,  201,  204,  288,  320; 
finances,    176-181. 

Shipping  administration  (American) :  legis- 
lation, 187,  I8ST  189-191,  193;  increas- 
ing shipping  facilities,  193-195,  208,  210; 
increasing  supply  of  sailors,  195-197;  re- 
arrangement of  resources,  197-202;  need 
of  organization,  202-205;  traffic  conges- 
tion, 198,  205-209;  control  of  ships,  188- 
193,  209;  organization,  208-213;  com- 
merce control  to  relieve  shipping, 
213-215;  condition  of  industry  at  begin- 
ning of  war,  266-271;  Shipping  Board, 
271-307.     See  also   Shipping   Board. 

Shipping  administration  (British):  requisi- 
tion policy,  153-150;  profiteering,  150, 
157;  taxation,  158,  173,  175;  organiza- 
tion and  results,  1915-1916.  159-167; 
control  of  ports,  160-164;  Ministry  of 
Shipping,  167-171;  control  over  mercan- 
tile marine,  171-174;  revenue,  175,  176; 
finances  of  shipowners,  176-180;  aid  to 
Allies,  181-184;  control  of  yards  and 
output,  244-252;  status  at  beginning  of 
1917,  252,  253;  organization  and  results 
of  government  control,  2.53-262;  ship- 
building problem   and   prospects,    262-264. 

Shipping  Board:  functions,  105,  106,  199, 
202,  211;  legislation  concerning,  189, 
191,  193,  271;  appointment,  192;  in- 
creasing shipping  facilities,  193,  194,  283- 
286,  295,  303-307;  efforts  to  relieve  port 
congestion,  198,  208,  209,  212;  control 
of  rates,  199,  200;  conflict  of  authority 
with  War  and  Navy  Departments,  202, 
204,  211;  delays  and  difficulties,  282, 
285-293,  298-301;  first  epoch  in  admin- 
istration, 273-280;  second  epoch,  280- 
296;  present  epoch,  296-307;  continua- 
tion after  war.   329,   ,3.30. 

Shipping,     British    Ministry    of:    personnel, 
41,    45,    167;    creation,    159,    166,    167; 
changes  in  policy,   168;   methods  of  work, 
169-174,   176;   departments,    170. 
Shipping  control  committees,   159.   211-21.3. 
Shipping    Controller — see    Maclay,     Sir    Jo- 
seph. 
Shipping   Council,    213. 
Shipping  policy  after  the  war — see  Postwar 

shipping  policy.  ( 

Ships   Licensing  Committee,   159,   160,   note 

1,    171,    172, 
Skinner  and  Eddy  Corp.,  296. 


R.^R 


INDEX 


Society    of    Naval    Architects    and    Marine 

Engineers:   petition  of,  289. 
South  Africa:  insurance  rates  to,  5;);  cotton 

imports,  01;   postal  subventions,   l.i\>. 
South    America:    line   traffic.    S;    division   of 
territory,     10;     tramp    traffic,     23;     gram 
exports,    34;     American    trade    with,    4b, 
107     191;    insurance   rates,    02,    53,    54, 
f>5-    coal   supply,    78;    British    trade   with, 
65,    90;    French    trade    with,    129;    coast- 
wise trade,    134. 
Southern    Pine   Association,   300. 
Spain:    line    traffic,    8;    grain    imports,    34; 
trade    of,    37;    coal    supply,    41;    diagram 
showing     vessel     movements     to      Lnited 
Kingdom,   79;    food   imports,   S3;   German 
trade,  98;  trade  with  United  States,  113; 
news  print  exports,   118;   governnient  aid 
to    shipping.    120.    127,    130,    136,    139, 
151;  concrete  vessels,  234. 
Standardized    ships:    before    the    war,    220; 
adopted     by     United     States,     219,  _  223; 
adopted   by   Great   Britain,   219.    2.m  ;    op- 
position    220,  221,   258;   various  desifws, 
2'i2    225,  259;  advantages,  222-225,  258, 
259;     fabricating    system,    225-22  (,    2.57- 
260,    262;    government   committees,    259, 
260! 
Statistical    tables:     insurance    rates,     1914- 
1918,  57:   coal   exports  of   United   States, 
77;  exports  from  Argentina,  80;  Japanese 
imports     and     exports,      1913-1917.     91,; 
United    States    trade   balance.    1917,    93; 
United    States    imports    of    raw    materials. 
1914-1917.  94;   British  shipbuilding.  246. 
255;  American  shipbuilding,  286,  note  3, 
299;   comparison   of   crew   cost   of   .\meri- 
can   and   British   tramp   steamers,   319. 
Steel  ships:  corrugated  type,  218;  standard- 
ization,   219-227:    new    methods    of    con- 
struction. 229,  230;  comparison  with  con- 
crete ships.   237-241. 
Stevens.  Ravmond  B..  274.  280. 
Submarine  Boat  Co..  285,  305,  note  3. 
Submarines,   effect    of,   on    ship    supply,    33, 
34,    246;    on    raw    material    imports,    38, 
39;   insurance   for   damage   by,    51;    effect 
of,   on    insurance   rates,    54.    55;    decrease 
in   successes.    55.    262.    263.    264;    efforts 
to    avoid.    163;    ships    designed    to    fight, 
217.  218;  ships  designed  to  prevent  dam- 
age   bv.    218.    228,    229,    239;    built    by 
Great  "Britain.   244;    future  of.   328.   329. 
Subsidies:    definition    of    term.    125;    neces- 
sity.   126;    arguments    against,    129;    pur- 
pose,   1.34,     137,     138;    legislation,    129, 
137,    138,    1.39,    150;    results,    137,    139; 
various  systems,  138,  139;  summary,  140- 
151. 
Subventions:  definition  of  term,  125;  postal 
requirements.    128.    133.    1.34.    1.37;    Brit- 
ish.    131.     132.     134.     140.     141.     144; 
American.    133.    i:'.4.    142;    foreign    lines, 
1.39.  140;  other  countries.  133-137;  legis- 
lation   concerning,     142,    144;     summary, 
140-151. 
Suez    Canal:    traffic   of,    82;    reimbursement 

of  dues.   131.   1.S2. 
Sugar:   freight   rates,   22,   172;   in  Java,  43; 

British  imports.  162. 
Sweden:  line  traffic.  8;  idle  ships.  34;  gov- 
ernment war  risk  bureau.  ,59;  decreased 
coal  supply,  77;  food  imports,  S3.  84; 
trade  wUh  United  States.  93;  German 
trade.  98.  99;  British  trade  bargain,  107; 
government  aid  to  shipping,  126,  127, 
1.30.  1.36,  150;  after  the  war  policy,  315. 
Switzerland,  trade  with   United   States,  95, 


Tankers,  165,  note  3.  172,  254. 

Tardieu.    Andre,    109,    110. 

Taxation:  increased,  158,  159,  173,  175; 
exemption    from,    132. 

Tide-Water  Coal  Exchange,  47,  208,  209. 

Trade:  paralysis  at  outbreak  of  war,  26-30, 
71,  74;  early  revival,  31;  disturbance 
and  limitation,  43,  53,  54,  56,  75,  76-83; 
government  control,  43,  96-114,  21.3- 
215;  dependence  on  marine  insurance,  49, 
50,  72;  factors  that  have  altered,  74- 
76;  diagram  showing  vessel  movements, 
79;  world's  food  supply,  83-8.5;  disloca- 
tion, 85-90;  decline  of  European  exports, 
90;  Japan's  gains,  90-92;  American  trade, 
92-96,  214;  with  the  enemy,  96;  British 
blockade,  97-100;  United  States  policy, 
100,  101,  103-107;  nations  as  bargainers, 
107-110;  scientific  restriction,  110-114, 
213,  214;  statistics,  77,  80,  92.  94,  108; 
after  the  war — see  Postwar  trade. 

Trade  unions:  conflicts  between  government 
control  and,  161,  248,  249,  251;  strikes, 
179,  249;  relation  to  capital,  247;  con- 
ditions in  Great  Britain,  247-252;  agree- 
ment concerning  munitions,  247,  248, 
249;  admission  of  women,  248;  agree- 
ment concerning  shipbuilding,  248;  re- 
laxation of  rules,  249,   251. 

Trading  with  the  enemy,  75,  96;  American 
act,  101. 

Tramp  ships:  description  of  traffic,  5-7;  pre- 
vention of  competition  by  line  traffic,   12- 
14;  freight  rates,  18-22;   Blue  Book  rates, 
153,   156;   requisition  of  ships,   168;   gov- 
ernment   operation,     170;    comparison    of 
British    and    American    crew    cost,    319; 
future   of,   332. 
Transport  Department,   164,    170. 
Transports:     prewar     provisions     for,     130, 
133;     Director     of,     156;     administrative 
agencies,    162,    164,    170,    211.    213;    mis- 
takes made  in   operation,    165,   202.   203; 
government  control,  184,   212;   new  types 
of  ships,   218. 
Tugs,  government  control  of,  209. 
Tyne  River  yards,  251. 

Unsinkable  ships,  228,  229. 

Wages:  disputes,  162;  increased,  179;  un- 
settled conditions,  302;  American  con- 
trol, 188;  British  control,  248;  com- 
parison of  American  with  English  and 
Japanese,  319,  320. 

War  Department:  vessel  supply  for,  199, 
202;  jurisdiction  over  convoy  system, 
204;  representation  on  war  boards.  209; 
Secretary  of,  211. 

War  Industries  Board,  283,  note,  397. 

War  Office,  45,   153,  260,   261. 

War  port  boards:  personnel,  209;  work  of, 
210. 

War  risk  bureau — see  Government  war  risk 
bureaus. 

War  risk  insurance — see  Insurance,  war 
risk. 

War  Trade  Board:  formation,  105,  283, 
note;  control  of  exports  and  imports, 
105.  112.  214.  335.  note;  statement  con- 
cerning Norway.  108. 

Wcbb-Pomerene   Bill.   119. 

Weir  river:   shipbuilding  nlan  of,  250. 

Welsford.  J.  II..  156,  175. 

West  Indies:  line  traffic,  8;  ships  during 
war,  200. 

Westinghouse  Co.,   226. 


INDEX 


357 


White,  James  B.,  273,  280. 

White  Star  Line,  142. 

Wilson,  Woodrow,  104,  105,  188,  191, 
l'JL>,  104. 

Wooden  ships:  standardization,  227,  228; 
renewal  of  industry,  230,  270,  275;  com- 
parison with  concrete  ships,  238,  239; 
Hough    type,    27G;    Ferris    design,    227, 


279.  288,  note  1;  management  of  con- 
struction, 298;  raw  materials,  300. 

Wool:  difficulty  in  shipping,  43,  78,  86.  87; 
entrepot  trade  in,  88,  note;  Argentine 
exports,    107. 

World  government:  conquest  or,  342-344; 
development  of,  344-346;  some  condi- 
tions of,  346-350. 


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